Agglomeration, Innovation, and Spatial Reallocation: The Aggregate Effects of R&D Tax Credits
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Summary:
I investigate the aggregate effects of R&D tax credits in the US. Because it subsidizes R&D activity and because credit rates vary between states, this policy has both spatial and dynamic effects on the economy. To address this issue, I construct an endogenous growth model with spatial heterogeneity and agglomeration spillovers in innovation. Aggregate outcomes in this model are thus affected by the spatial distribution of the population in the economy, which is itself endogenous and reacts to policy. I use this framework to identify a set of local R&D subsidies that maximize aggregate welfare.
Series:
Working Paper No. 2022/131
Subject:
Credit ratings Labor Money Population and demographics Production Productivity Tax allowances Taxes Wages
Frequency:
regular
English
Publication Date:
July 1, 2022
ISBN/ISSN:
9798400212666/1018-5941
Stock No:
WPIEA2022131
Pages:
92
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