Tax credit

A fter the economic crisis that erupted in 1994, extreme poverty in Mexico increased steadily until it ended up affecting more than one third of the population in 1996. Since then, the government has increased substantially social benefits, directing most of its efforts toward reducing poverty (the percentage of population living in poverty, although still high, is now lower than in the pre-crisis years). Regarding the tax system, in 2007 the Congress enacted several changes in the case of income taxes and some excise taxes. Thus, on both sides, benefits and taxes, there have been several recent reforms in Mexico that are worth to study in a micro-simulation framework. Also, micro-simulation can be of help in the search of better tax regimes. 1.1 Basic figures According to the classical World Bank classification, Mexico is an uppermiddle income country. It has one of the highest incomes per capita in Latin America, and its Gross Domestic Product (gdp) is, in the region, second only to Brazil's (which is about 12% higher in dollar terms). Nevertheless, its income per capita, measured in purchasing power parity terms, is one of the lowest among the average real incomes of the other [135]

stands on its own as a valuable resource for students of social policy and uni versity faculty who offer cross-disciplinary approach to the teaching of eco nomics, social sciences, rehabilitation and disability policy. Policy makers, journalists, and other participants in debates on disability and income security policy will gain from the papers that follow an understanding of the breadth and diversity of the population of persons with disabilities and the need for equally broadly based interventions to foster their economic security and full participation in American life.

In this article we address various issues raised by the evaluation of the R&D tax credit policy. We first consider the studies that estimate the direct effects of the tax credit on R&D inputs. We discuss results obtained through different approaches and methods and show that they give a contrasted picture of the policy’s effectiveness. Next we argue that a comprehensive evaluation of the R&D tax credit should include other outcomes and present studies focussing on them. We also initiate a very tentative meta-analysis to obtain a more synthetic view on the various evaluation results. We finally conclude that harmonization and increased comparability in evaluation studies would be useful to bridge the gab between evaluation and policy design and implementation.

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper evaluates the nature and extent of, and possible responses to, two of the central challenges that globalization poses for revenue mobilization in Sub-Saharan Africa (SSA): from corporate tax competition, and from trade liberalization. It does so using a new dataset with features needed to meaningfully address these issues: a distinction between resource-related and other revenues, and a disentangling of tariff from commodity tax revenue. Countries ' experiences vary quite widely, nonresource revenues have been essentially stagnant. Corporate tax revenues have held up, despite a reduction in rates and evidence of substantial base-narrowin...

In this paper we study the relationship between tariff structure, growth and welfare for a small, open country with endogenous growth induced by human capital accumulation. Using a model with trade in consumption and two investment goods, we consider the short-and long-run effects of a permanent unanticipated increase in the tariff rates under different replacement regimes, i.e. lump-sum transfer or investment tax credit. We show that most tariffs reduce growth, even in the short run. Also, all tariffs are welfare-reducing in the long run, but some may improve welfare in the short run. We find that, in general, differential tariffs are welfareoptimal. Starting from a uniform tariff structure, a revenue-neutral tariff reform may, therefore, increase growth and welfare in the long run. The structure of the optimal differential tariff varies, however, depending on the replacement regime.

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper provides an updated overview of tax incentives for business investment. It begins by noting that tax competition is likely to be a major force driving countries' tax reforms, and discusses tax incentives as a possible response to this. This is complemented by other arguments for and against tax incentives, and by an illustrative analysis of different incentives using effective tax rates. Findings from the empirical literature on tax incentives are also presented. Based on the overview of theoretical and empirical findings, the paper then suggests a matrix of criteria to determine the usefulness of different tax incentives depending on a country's circumstances.

ABSTRACT : TAX INCENTIVES OF R&D It is popular to promote private R&D investments with tax credits or tax allowances in the OECD countries. This report depicts the justifications and criteria presented in economic literature, which should be used when decisions about tax incentives are made. The main argument is that firms do not consider all the social welfare gains, when they decide about an R&D investment. Another linked justification is that the production based on the innovation may be too small, because the firm must finance the sunken costs generated both by the failed and the successful trials, and sell with a price that is higher than the marginal costs. On the other hand, there are also negative externalities involved in R&D investments. Moreover, introduction of a tax incentive necessitates that the welfare gain generated is sufficient to cover the losses due to the marginal costs of public funds, which appear due to the lost tax revenues. The report concludes that there ...

Under both a cap-and-trade system and a greenhouse gas tax, the government will regulate energy suppliers and distributors, utility companies, and large manufacturers. These parties will bear the statutory incidence of the regulation. However, the financial impacts of regulating greenhouse gas emissions will be borne primarily by consumers. Consumers will bear the economic incidence of the regulation in the form of increased costs of gasoline, electricity, and home heating fuels and in increased consumer prices for all goods manufactured or distributed using fossil fuels. Greenhouse gas regulation will also generate significant revenue. This Article addresses the question of what should be done with those revenues. Models of the economic incidence of the two systems indicate that while high-income households will bear a larger portion of the distributional impacts because they consume more, low-income households will bear a disproportionate burden as a percentage of their household ...

Current tax law provides tax advantages to owner-occupied housing that increase with a household's income. This well understood fact has led to periodic proposals to substitute a tax credit equal to, say, 25 percent of housing-related expenses for their current deductibility. Because all of the tax reforms considered in this paper (Hall-Rabushka, Kemp-Kasten and Bradley-Gephardt) move toward a flat rate schedule, they all will sharply reduce the tax-advantages of owner-occupied housing to higher income households relative to lower income households. In fact, our analysis suggests that all reforms will lower the price of obtaining housing services from owner-occupied housing for these households and raise it for higher-income households. The "breakeven" income at which the price of these housing services would be unchanged is about $55,000 for Kemp-Kasten and Hall-Rabushka probably $10,000 less for Bradley-Gephardt. The price of renting housing should rise under all reforms, probably by 5 to 10 percent. In combination with the decline in the price of obtaining housing services for middle and lower income households, this should give a signficant boost to homeownership. Under Kemp-Kasten, Ownership rates will rise for four-member households with AGI (as renters

This series is designed to make available to a wider readership selected studies drawing on the work of the OECD Centre for Tax Policy and Administration. Authorship is usually collective, but principal writers are named. The papers are generally available only in their original language (English or French) with a short summary available in the other. The opinions expressed and arguments employed in these papers are the sole responsibility of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

Enhanced productivity in the logging industry is one of the key factors that determine the competitiveness of the forest products sector. Policy measures to improve efficiency must therefore start at the timber harvesting stage. This study analyzed and compared the production technologies in the timber harvesting industries of British Columbia (B.C.), Ontario, and Quebec, which are Canada's largest timber producing

The EIB Papers are published each year by the Economic and Financial Studies Division of the European Investment Bank. The journal is divided into two issues and is aimed at encouraging high-quality economic research and debate on matters of European interest. As such the Papers are intended to be accessible to non-specialist readers and emphasise policy dimensions rather than technical issues. They present the results of research carried out by Bank staff together with contributions from external scholars and specialists. Articles will only be accepted for publication on the condition that they have not already been published elsewhere. All articles in the EIB Papers may be freely reproduced and quoted; however, the Editor would appreciate acknowledgement and a copy of the publication in question. They can also be freely accessed and downloaded from our website: www.eib.org/efs/ The views expressed in the articles are those of the individual authors and do not necessarily reflect the position of the EIB.

PurposeAs the interest in renewable energy increases and the number of federal and state incentives to support renewable energy has also grown in recent years, it seems worthwhile to explore the economics of using small wind energy systems to offset electricity costs on farms. The purpose of this paper is to explore the economics of small wind turbine installations on a dairy in Michigan through case study analysis.Design/methodology/approachAn Excel‐based capital budgeting model is developed that contains two sub‐modules: one that estimates the value of the wind energy based on the measured wind resource, and an investment module that includes factors such as investment cost, financing parameters, sales of electricity; grants and tax credits and tax information. Cases using 20 and 50 kW turbine systems are analyzed.FindingsThe results of the case studies show that in a favorable wind resource, the federal tax and United States Department of Agriculture incentives as well as state p...

The measurement of the effects that public support to private R&D has on R&D investment and output has attracted substantial empirical research in the last decade. The focus of this research has mostly focused on testing for possible crowding out effects. There is virtually no study aiming at understanding how and why these effects may or may not be occurring. In addition, the effects of the two most common tools of public support, direct funding through grants and loans, and tax incentives, have been studied separately. We contribute to existing work by focusing on the determinants of the use by firms of these two mechanisms and their potential link to sources of market failures. We think this is an important step to assess impact estimates. Using firm-level data from the Spanish Community Innovation Survey (CIS), we find that firms that face financial constraints, as well as newly created firms, are less likely to use R&D tax credits and more likely to apply for and obtain direct public funding. We also find that large firms that care about knowledge protection are more likely to apply for and obtain direct funding, while SMEs are more likely to use tax incentives. Our results show that direct funding and tax credits, as currently designed, are not perfect substitutes because firms are heterogeneous, and suggest that from a social perspective, and provided that crowding out effects can be ruled out for both instruments, some combination of both may be preferable to relying on only one.

Although the research field of film tourism has become increasingly popular, the business tourism related aspects of film tourism have received less academic attention. The aim of the present paper is to investigate the tourism related aspects of film productions in a certain location. The focus is on the case of Budapest, a Central European city that has hosted numerous international film productions in the last two decades. The findings of the paper show that filmmakers and above-the-line-crew members are long-stay business travellers who constitute an important segment of the city's tourism and hospitality sector. The case of Budapest evidences that the institutional and policy support through tax credits and incentives aimed to enhance co-productions and to attract international productions offer benefits for the local film industry as well as for the tourism sector. Although the policy support is narrowly focusing on the immediate economic benefits of foreign film productio...

McClure does a good job of describing the history, scope, magnitude, and significance of the Low-Income Housing Tax Credit (LIHTC) program. McClure's investigation is based on identifying the location of LIHTC units placed in service from 2000 through 2004 by census tract. From these data McClure concludes that the state Housing Finance Agencies are not directing LIHTC allocations to areas

This paper analyses the effect of a tax mix modification. More precisely, the authors assess the relevance of increasing consumption taxes and at the same time decreasing income taxes. Several arguments in favour of modifying the tax mix are analysed such as its impacts on savings, on labour supply and on tax compliance. While the Quebec government has recently modified its tax mix, the authors observe that it still relies more on income taxes, compared to the OECD countries average. However, comparative analysis data does not show any tendencies concerning the modification of the tax mix in developed countries. In fact, the reduction of income taxes observed in the analyzed countries is much more the consequence of a desire to decrease the tax burden rather than a desire for a modification of the tax mix. In this context, if the Quebec government is going to go forward with a tax mix reform, the authors suggest a moderate reform since the consumption tax rate is already one the hig...

Recent theoretical work has argued that a small open economy should use residence-hased but not source-based taxes on capital income. Given the ease with which residents can evade domestic taxes on foreign earnings from capital, however, a residence-based tax may not be administratively feasible, leaving no taxes on capital income. The objective of this paper is to explore possible reasons why capitalincome taxes have survived in the past, in spite of the above pressures. Any bilateral approach, such as sharing of information among governments or direct coordination of tax rates, suffers from the problem that the coalition of countries is itself a small open economy, so subject to the same pressures. Capital controls, preventing capital outflows, may well be a sensible policy response and were in fact used by a number of countties. Such controls have many drawbacks, however, and a number of countries are now abandoning them. The final hypothesis explored is that the tax-crediting conventions, used to prevent the double taxation of international capital flows, served also to coordinate tax rates. The paper shows that while no Nash equilibrium in tax rates exists, given these tax-crediting conventions, a Stackelberg equilibrium does exist if there is either a dominant capital exporter or a dominant capital importer, in spite of the ease of tax evasion. While the U.S. , as the dominant capital exporter during much of the postwar period, may well have served as this Stackelberg leader, world capital markets are now more complicated. These tax-crediting conventions may no longer be sufficient to sustain capital-income taxation.

Our previous work has suggested that the closure of Catholic elementary schools generates disorder and suppresses social cohesion in urban neighborhoods-findings that support the conclusion that Catholic elementary schools create neighborhood social capital. We extend our inquiry here by asking if Catholic school closures might also affect crime rates. Using factors independent from neighborhood indicators, specifically school and parish leadership characteristics, we created an exogenous factor that predicted which Catholic schools might close in urban Chicago, and used that factor, with sociodemographic variables, to predict police-beat-level crime rates. We find that Catholic school closures slow the rate of decline of crime in a police beat compared to beats with no Catholic school closure. We also find that higher perceived disorder predicted higher initial levels of crime. Our findings provide insight into which policing policies are effective and the benefits of involving religious institutions in crime-prevention efforts. They also lend support to "school-choice" mechanisms, such as vouchers or tax credits, that would provide financial resources to students attending urban Catholic schools.

The established theory of tax progressivity cannot handle basic tax reform questions, such as whether an increase in personal allowances makes the tax system more progressive, because the core results assume that tax liability is never zero. This paper generalises the core theory to allow for zero tax payments, and applies the new framework to the analysis of allowances, income-related deductions and tax credits. Log concavity of the tax schedule--a property quite distinct from any existing notion of progressivity--emerges as the critical determinant of whether the distribution of the tax burden becomes more progressive as allowances are increased.

Our previous work has suggested that the closure of Catholic elementary schools generates disorder and suppresses social cohesion in urban neighborhoods-findings that support the conclusion that Catholic elementary schools create neighborhood social capital. We extend our inquiry here by asking if Catholic school closures might also affect crime rates. Using factors independent from neighborhood indicators, specifically school and parish leadership characteristics, we created an exogenous factor that predicted which Catholic schools might close in urban Chicago, and used that factor, with sociodemographic variables, to predict police-beat-level crime rates. We find that Catholic school closures slow the rate of decline of crime in a police beat compared to beats with no Catholic school closure. We also find that higher perceived disorder predicted higher initial levels of crime. Our findings provide insight into which policing policies are effective and the benefits of involving religious institutions in crime-prevention efforts. They also lend support to "school-choice" mechanisms, such as vouchers or tax credits, that would provide financial resources to students attending urban Catholic schools.

Subsidies to commercial R&D can be given as R&D tax credits or through direct grants. Tax incentives have become an increasingly popular policy tool over the last decades. In this note I discuss the pros and cons of the two forms of subsidies in light of Norway’s experience with R&D policy. I review an ongoing evaluation of the Norwegian R&D tax credit introduced in 2002 and reflect on whether it is desirable for Finland to introduce a similar scheme. I suggest that this is not desirable. If Finland introduces an R&D tax credit, I argue that it should be limited to small and medium sized companies. PITÄISIKÖ SUOMEN OTTAA KÄYTTÖÖN T&K :N VEROKANNUSTIMET? POHDINTAA NORJAN TEKNOLOGIAPOLITIIKASTA SAATUIHIN KOKEMUKSIIN PERUSTUEN

The Community Affairs Department of the Federal Reserve Bank of San Francisco created the Center for Community Development Investments to research and disseminate best practices in providing capital to low-and moderate-income communities. Part of this mission is accomplished by publishing a Working Papers Series. For submission guidelines and themes of upcoming papers, visit our website: www.frbsf.org/cdinvestments. You may also contact David Erickson,

ResUMeN en este trabajo llevamos a cabo un ejercicio de microsimulación para analizar la política autonómica en el IRPF, utilizando la Muestra IRPF 2002 IeF-aeaT. Hasta el momento las comunidades autónomas han utilizado las deducciones como instrumento principal para modificar el IRPF. sin embargo parece que las deducciones autonómicas llevan aparejados elevados costes de diseño, legislativos y administrativos; mientras que sus beneficios afectan poco a pocos contribuyentes. Nuestra hipótesis es que se puede alcanzar un resultado similar con unos costes menores. Para ello hemos considerado dos alternativas, sin duda más sencillas: una ligera reducción de los tipos impositivos de las tarifas autonómicas, y una deducción general que debería instaurar cada comunidad autónoma.

O autor faz um breve estudo da decadência e da prescrição aplicadas ao Direito Tributário brasileiro, enfocando, primeiramente, a conceituação de obrigação e crédito tributários para, logo após, falar sobre as causas de extinção do crédito tributário. Analisa, também, decisões judiciais recentes sobre o tema.

Tax cuts can deepen a recession if the short-term nominal interest rate is zero, according to a standard New Keynesian business cycle model. An example of a contractionary tax cut is a reduction in taxes on wages. This tax cut deepens a recession because it increases deflationary pressures. Another example is a cut in capital taxes. This tax cut deepens a recession because it encourages people to save instead of spend at a time when more spending is needed. Fiscal policies aimed directly at stimulating aggregate demand work better. These policies include 1) a temporary increase in government spending; and 2) tax cuts aimed directly at stimulating aggregate demand rather than aggregate supply, such as an investment tax credit or a cut in sales taxes. The results are specific to an environment in which the interest rate is close to zero, as observed in large parts of the world today.

This paper examines the extensive and intensive margin changes in land use in the U.S. likely to be induced by biofuel policies and the implications of these policies for GHG emissions over the 2007-2022 period. The policies considered here include the Renewable Fuel Standard (RFS) by itself as well as combined with current biofuel tax credits or a carbon price policy. We use a dynamic, spatial, multi-market equilibrium model, Biofuel and Environmental Policy Analysis Model (BEPAM), to endogenously determine the effects of these policies on cropland allocation, food and fuel prices, and the mix of first and second-generation biofuels. We find that the increase in crop prices under the RFS is likely to be less than 20% in most cases and this increase is much smaller when the RFS is accompanied by volumetric subsidies or a carbon price policy since these policies induce a switch away from corn ethanol to cellulosic biofuels. The impact of the RFS on GHG emissions reduction in the U.S. is fairly modest in size but increases when the RFS is accompanied by volumetric subsidies or a carbon price policy. However, domestic savings in GHG emissions achieved by the RFS can be severely eroded by the indirect land use changes and the rebound effect on global gasoline consumption. The net reductions in global GHG emissions are largest when the RFS is accompanied by a carbon price policy. 1 Estimates of the CO 2 intensity of corn ethanol not including ILUC are 60-65 g CO 2 per Mega-joule (MJ) CARB. 2009. Proposed Regulation to Implement the Low Carbon Fuel Standard Volume I. California Environmental Protection Agency Air Resouces Board : http://www.arb.ca.gov/fuels/lcfs/030409lcfs_isor_vol1.pdf.. Liska et al. (2009) estimate this intensity to lie between 31-76 g CO 2 per MJ.

This study examines the effectiveness of R&D tax incentives using an unbalanced panel of 434 Canadian firms. Not all firms in the sample are R&D performers. A B-index summarizing the various tax incentives for R&D is constructed for each firm, taking into account individual ceilings in the use of relevant tax incentives. A generalized Tobit model with fixed effects is estimated. A one percent increase in the federal tax credit of R&D yields an average of $0.98 additional R&D expenditure per dollar of tax revenues foregone.

This Discussion Paper is issued under the auspices of the Centre's research programme in Industrial Organization and Public Policy. Any opinions expressed here are those of the author(s) and not those of the Centre for Economic Policy Research. Research disseminated by CEPR may include views on policy, but the Centre itself takes no institutional policy positions. The Centre for Economic Policy Research was established in 1983 as a private educational charity, to promote independent analysis and public discussion of open economies and the relations among them. It is pluralist and non-partisan, bringing economic research to bear on the analysis of medium-and long-run policy questions. Institutional (core) finance for the Centre has been provided through major grants from the Economic and Social Research Council, under which an ESRC Resource Centre operates within CEPR; the Esmée Fairbairn Charitable Trust; and the Bank of England. These organizations do not give prior review to the Centre's publications, nor do they necessarily endorse the views expressed therein. These Discussion Papers often represent preliminary or incomplete work, circulated to encourage discussion and comment. Citation and use of such a paper should take account of its provisional character.

This paper proposes a stochastic model of investment with embodied technolog-ical progress, in which firms invest not only to expand capacity but also to replace old machines. Contrary to exogenous depreciation as in Abel and Eberly (2004), the scrapping is ...

This paper reviews the empirical literature on the impact of company taxes on the allocation of foreign direct investment. We make the outcomes of 25 empirical studies comparable by computing the tax rate elasticity under a uniform definition. The mean value of the tax rate elasticity in the literature is around-3.3, i.e. a 1%-point reduction in the host-country tax rate raises foreign direct investment in that country by 3.3%. There exists substantial variation across studies, however. By performing a meta analysis, the paper aims to explain this variation by the differences in characteristics of the underlying studies. Systematic differences between studies are found with respect to the type of foreign capital data used, and the type of tax rates adopted. We find no systematic differences in the responsiveness of investors from tax credit countries and tax exemption countries.

We develop a dynamic discrete choice model of training choice, employment and wage growth, allowing for job mobility, in a world where wages depend on firm-worker matches, as well as experience and tenure and jobs take time to locate. We estimate this model on a large administrative panel data set which traces labour market transitions, mobility across firms and wages from the end of statutory schooling. We use the model to evaluate the life-cycle return to apprenticeship training and find that on average the costs outweigh the benefits; however for those who choose to train the returns are positive. We then use our model to consider the long-term lifecycle effects of two reforms: One is the introduction of an Earned Income Tax Credit in Germany, and the other is a reform to Unemployment Insurance. In both reforms we find very significant impacts of the policy on training choices and on the value of realised matches, demonstrating the importance of considering such longer term implications. * We thank seminar participants at the European Central Bank, NYU, the Minneapolis Fed, the London Business School, the 2005 SITE meeting at Stanford, the Labor workshop at Yale, the Department of Economics Stanford and the Econometric Society European meeting for comments.We are grateful for funding from the DfES through the Centre for Economics of Education and to the ESRC through CMAPP at the IFS.

Over much of the developed world governments make significant financial transfers to parents with dependent children. For example, in the US the recently introduced Child Tax Credit (CTC), which goes to almost all children, costs almost $1billion each week, or about 0.4% of GNP. The UK has even more generous transfers and spends about $25 a week on each of about 8 million children-about 1% of GNP. The typical rationale given for these transfers is that they are good for our children and here we investigate the effect on household spending patterns. The UK is an excellent laboratory to address this issue because such transfers, known as Child Benefit (CB), were simple lump sum universal payments for a period of more than 20 years. We do indeed find that CB is spent differently from other income-paradoxically, it appears to be spent disproportionately on adult-assignable goods. In fact we estimate that more than half of a marginal pound of CB is spent on alcohol. We resolve the puzzle by showing that the effect is confined to unanticipated variation in CB so we infer that parents are sufficiently altruistic towards their children that they completely insure them against shocks.

Fiscal arrangements in Brazil severely constrain the federal government's ability to fulfill its mandate as a national government. Municipal governments, meanwhile, have more revenues than they need, encouraging fiscal mismanagement. Reform is urgently needed to counteract Brazil's fiscal imbalance. EePo<iligy.R candExtemflAffaiComplexdnbutPREWoddngPaptoaninatethefindingsof wodinpropessand to enamungc the exchange of ideas among Bank staff and all othas inteeed in developnent issues. lese papes cany the names of the authors, rflect only their viws. and should be used and cited accordingly The findings, interpretations, and conclusio arm the authons own. They should not be atrbted to the World Bank, its Board of Dicos, its managaetnt,or any of its membercountrie.s Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized * Administration of the general value-added created a vertical fiscal imbalance. tax by the state involves unresolved issues about tax crediting on interstate trade. Shah presents policy options to resolve these problems. * The state and municipal revenue-sharing funds do not distribute revenues fairly and equitably. The PRE Working Paper Series disseminates the findings of work under way in the Bank's Policy, Research, and External Affairs Complex. An objective of the series is to get thesefmdings out quickly, even if presentations are less than fully polished. The findings, interpretations, and conclusions in these papers do not necessarily represent official Bank policy. Produced by the PRE Dissemination Center governments have been given the legislative authority on subjects of local interest to supplement federal or state legislation. Furthermore, they have been assigned responsibilities in public transport, preschool and elementary education, health care, land use and historical and cultural preservation. Any subjects not specified by the Constitution have been reserved for state government legislation. 1.12 Conceptual Basis of Expenditure Assignment Allocation of expenditure and tax functions to various member units is the most fundamental issue in a federation. Fiscal federalism literature argues that expenditure assignment must precede tax assignment. This is because tax assignment would in general be guided by expenditure requirements at different levels and these cannot be worked out in advance of expenditure assignment. This literature also provides broad guidance in delineating expenditure responsibilities. For example the so called * Preliminary data ** Estimate

We start out reviewing the justification for press subsidies. The social value of journalism can be larger than what the newspapers are able to extract because of knowledge externalities, public good characteristics of investigative journalism and non-appropriability of consumer surplus. A free market will then underinvest in journalism. Problems related to economies of scale and scope further imply that the number of newspapers and their circulations may be too small, while advertising can give newspapers too strong incentives to aim for the mass market. According to the media economics literature, a preferential VAT regime provides higher differentiation incentives for existing newspapers, while a tax deduction for editorial expenses is well suited to increase journalistic investments. Micro economic theory further indicates that fixed transfers is the most efficient instrument to reduce entry barriers and avoid newspaper mortality, and that a subsidy per copy sold will increase circulation. We end the article by summarizing empirical evidence on the effects of media support.

-Cette étude vise à estimer l'effet du coût du capital sur les investissements en recherche et développement des entreprises, et plus particulièrement à estimer l'effet du crédit d'impôt sur la recherche, lequel constitue, depuis 1983 en France, l'un des principaux outils de la politique publique d'incitation à la recherche et l'innovation pour les entreprises. On propose d'abord une décomposition du coût d'usage du capital de recherche et développement (R&D) des entreprises en distinguant quatre composantes qui tiennent compte respectivement de l'imperfection des marchés des capitaux, de la fiscalité sur les bénéfices, des règles d'amortissement fiscal, et de l'existence du crédit d'impôt recherche (CIR). On s'appuie ensuite sur cette décomposition pour estimer l'effet du CIR sur la R&D, dans le cadre d'un modèle économétrique appliqué à un panel d'entreprises industrielles françaises sur la période 1980-1997. Au delà de la demande qui reste le déterminant majeur des investissements en R&D des entreprises, il apparaît que le coût du capital de recherche a un effet négatif statistiquement significatif, en raison surtout d'un rôle incitatif très important du CIR. On trouve ainsi qu'un relèvement permanent de 10% du taux du CIR pourrait entraîner un développement à moyen-long terme de l'investissement et du capital en R&D qui serait de l'ordre de 3 à 5,5 %, ce qui correspondrait à une augmentation de l'investissement de l'ordre de 2 à 3,5 fois le coût budgétaire annuel de cette mesure. Un tel effet parait cependant très élevé, et nos résultats devront être confirmés par un approfondissement de l'étude, notamment sur la période récente, et si possible aussi sur la base du crédit d'impôt effectif (qui est une information confidentielle) et non seulement sur celle du crédit d'impôt simulé.

Enhanced productivity in the logging industry is one of the key factors that determine the competitiveness of the forest products sector. Policy measures to improve efficiency must therefore start at the timber harvesting stage. This study analyzed and compared the production technologies in the timber harvesting industries of British Columbia (B.C.), Ontario, and Quebec, which are Canada's largest timber producing provinces. The study used annual data of log output and four inputs: labour, capital, energy, and materials from 1961 to 1999. Six models, encompassing different restrictions on the long-run translog cost function, were applied to each industry to determine the best technology for that industry. The cost function that best described each industry's technology was used to estimate own-and cross-price elasticities, input substitution elasticities, scale effects, technological change and bias, and total factor productivity. The production technologies of B.C. and Quebec were best described by homothetic, linearly homogeneous functions, while that of Ontario was found to be non-homothetic. Based on the Morishima elasticities of substitution, the results in general indicated inelastic substitution among all the four factor inputs. As a result the industries had limited options to make input adjustments with respect to changes in relative input prices; and hence required output levels were maintained at higher production costs. All three provincial industries exhibited biased technological changes, saving on capital and labour, and intensively using energy and materials. Labour and capital therefore recorded higher productivity than energy and materials over all provinces; consequently, efforts at improving the efficiency of the logging industries should focus on increasing the productivity of the latter inputs. Scale effects ranged from 2.17 in B.C. to 1.44 in Quebec implying that the timber harvesting industries appeared to have had the greatest potential for cost reduction through output expansion. In a competitive market structure, the strategic policy implication of these scale effects is that low-cost producers force high-cost industries out, leading to industrial concentration. The low levels of technological change in the timber harvesting industries observed in this study may reflect these industrial concentration problems. Policies that reduce the rental cost of capital, such an increase in investment tax credits and cuts in the corporate income tax rates have the potential to increase productivity and hence improve on the timber industry's competitive position.

This paper attempts to quantify the aggregate net effect of government funding on business R&D in 17 OECD Member countries over the past two decades. Grants, procurement, tax incentives and direct performance of research (in public laboratories or universities) are the major policy tools in the field. The major results of the study are the following: Direct government funding of R&D performed by firms has a positive effect on business financed R&D (except if the funding is targeted towards defence activities). Tax incentives have an immediate and positive effect on business-financed R&D; Direct funding as well as tax incentives are more effective when they are stable over time: firms do not invest in additional R&D if they are uncertain of the durability of the government support; Direct government funding and R&D tax incentives are substitutes: increased intensity of one reduces the effect of the other on business R&D; The stimulating effect of government funding varies with respect to its generosity: it increases up to a certain threshold (about 10% of business R&D) and then decreases beyond; Defence research performed in public laboratories and universities crowds out private R&D; Civilian public research is neutral for business R&D.