The use of fiscal policy instruments to stimulate private R&D is
widespread and important in some countries like Spain. In this paper we
explore the effectiveness of R&D tax incentives on knowledge capital
accumulation in Spanish manufacturing firms using an unbalanced panel
and compare the estimates based on claimed and claimable tax reductions.
We find that while large firms use the programme more than small ones,
the impact of the programme measured by the price elasticity is smaller
for large firms than for SMEs. The price elasticities are higher when
the ex-ante claimable tax reductions rather than the ex-post actually
claimed tax reductions are used to compute the user cost of R&D.
Keywords: tax incentives, effective user cost, panel data, sample selection
JEL Classification: H25, H32, O32