How Effective are Fiscal Incentives for R&D?

This paper surveys the econometric evidence on the effectiveness of fiscal incentives for research and development (R&D). The authors describe the effects of tax systems in OECD countries on the user cost of R&D - the current position, changes over time and across different firms in different countries. The authors describe and criticize the methodologies used to evaluate the effect of the tax system on R&D behaviour and the results from different studies. In the current (imperfect) state of knowledge they conclude that a dollar in tax credit for R&D stimulates a dollar of additional R&D.