Independent Variables

Justification for introducing variables

PEP = period of estimation

R&D expenditure and public policies (incremental, hybrid, volume … etc.) change over time and one would think that these changing perspectives may affect the findings of studies. We introduce the average year of data or the number of years covered by the study to control for the study to control for any temporal impact on the estimate of tax credit on R&D investment. This enables us to capture any trend in tax credit.

NAUT = number of authors

For each paper, we introduce the number of co-authors.

TD = type of data

Studies in our data set which evaluate the effect of tax credit on R&D investment have conducted their work at different levels of analysis, ranging from individual firm to the whole economy: some empirical studies use firm or industry level data and some studies evaluate the effectiveness of tax credit across nations. The various analysis levels of data correspond to different estimations across studies. By using a dummy variable, we control the unit of analysis because tax credit and its effect on R&D expenditure may vary according to the unit analyzed.