Effects Of Public Subsidies Research Articles

Impact of public subsidies on persistent and transient technical efficiency: evidence from French mixed crop-livestock farms

ABSTRACT This study contributes to the existing literature on the influence of public subsidies on farmers’ technical efficiency by highlighting the importance of separating persistent and transient inefficiency. Using data from a sample of French mixed (crop-livestock) farms, and relying on recent developments in stochastic frontier analysis, we find that public subsidies are positively associated with both persistent and transient technical inefficiency. The effect of public subsidies on persistent technical inefficiency suggests that they induce sluggish adjustments (restructuring) in farm management practices.

Caring For Carers?

Caring For Carers?

Caring for Carers? The Effect of Public Subsidies on the Wellbeing of Unpaid Carers

Caring for Carers? The Effect of Public Subsidies on the Wellbeing of Unpaid Carers

Caring for Carers? The Effect of Public Subsidies on the Wellbeing of Unpaid Carers

Caring for Carers? The Effect of Public Subsidies on the Wellbeing of Unpaid Carers

The effects of public subsidies on emerging industry: An agent-based model of the electric vehicle industry

Public subsidies are widely used as policy incentives to promote strategic industry development, especially in emerging industries that depend heavily on the use of new technologies. This study explores the differential effects of consumer subsidies and manufacturer subsidies on the development of new technology in the electric vehicle industry. An agent-based simulation model is constructed which fully considers the individual heterogeneity of consumers and manufacturers in decision-making, with the parameter settings derived from the data of the U.S. automobile market in 2010. Based on robustness tests, the findings suggest that consumer subsidy is more effective than manufacturer subsidy in promoting the popularity and technological breakthrough of electric vehicles. Subsidy intensity and duration are indicated to be important factors for policy effectiveness.

Do the types of subsidies and firms’ heterogeneity affect the effectiveness of public R&D subsidies? Evidence from China’s Innofund programme

This paper aims to fill the gap in the extensive literature on the results of interaction between public and private R&D expenditures. Two types of public R&D subsidies, the appropriations and loan interest, are investigated in the effect of public subsidies by applying for a unique micro data set of Chinese manufacturing firms combined with the Innovation Fund for Small and Medium Technology-based Firms (Innofund). The results are consistent with the prediction that loan interest subsidies based on more competitive selective system are more effective for the public R&D subsidies than the appropriations. Firms’ heterogeneity, measured by state-owned enterprises (SOEs) and private-owned enterprises (POEs), is tested for the different impact of public subsidies on corporate R&D investment. The results show that the crowding-in effect is mainly driven by POEs, not by SOEs, which confirms the theoretical assumption by Aghion and Tirole that the agency problem play a dominant role in corporate R&D activities. An improved econometric method, combined propensity score matching with difference-in-differences estimation strategy, is applied for correcting the selection bias. Our results are robust to different matching techniques.

Effect of public subsidies on farm technical efficiency: a meta-analysis of empirical results

ABSTRACTInvestigating the impact of public subsidies on farm technical efficiency is becoming a critical issue in applied agricultural policy analysis. This article presents a meta-analysis of empirical results on this issue, based on data gathered from a systematic literature review. We find that, in the empirical literature, subsidies are commonly negatively associated with farm technical efficiency. Meta-regression estimation results show that the direction (significantly negative, significantly positive or non-significant) of the observed effects is sensitive to the way subsidies are modelled in the empirical studies.

Evaluating the effect of public R&D subsidies on Italian firms' innovation activities: a subgroup analysis of 2008 CIS data

This paper evaluates the effectiveness of public subsidies in fostering RD but, isolated to some subgroups.

Firm Subsidies and the Innovation Output: What Can We Learn by Looking at Multiple Investment Inputs?

In this paper we address the issue of if and how firm subsidies foster investment in fixed capital and R&D and by doing so they contribute to the innovation output. We therefore extend the existing literature which so far has mostly focussed on the effects of public subsidies on specific innovation inputs. By using a rich dataset on Italian firms we estimate the relationships between inputs (investments) and innovation outputs (process and product) as well as investment equations in which expected firm subsidies affect the inputs. In order to deal with endogeneity issues we propose an empirical approach which exploits the information and characteristics of our dataset. We find that expected public intervention has an effect on investment in fixed capital and innovation. The impact of firm subsidies on R&D investment is found to be somehow weaker as well as its final effect on innovation.

The credit-risk implications of home ownership promotion: The effects of public subsidies and adjustable-rate loans

This study analyzes the credit risk of housing loans with a particular focus on mechanisms that may help disentangling the financial constraints of low-income borrowers: public support and access to adjustable-rate loans. Using a large database of French housing loans covering the years 2000–2010, we show the following: supplying loans with financial assistance helps financially constrained borrowers to absorb income shocks, adjustable-rate loans are riskier on average, and the combination of public support and adjustable rates can lead to a concentration of risk in the lender’s portfolio. The risk measurement methodology used in this paper extends the one-factor economic capital model underlying the Basel 2 regulatory credit-risk formulas. This portfolio approach leads to the credit risk of housing loans being handled as a portfolio management issue for the lender. From this perspective, our results also illustrate that the ability to promote access to homeownership to low-income borrowers may be determined by the lender’s capacity to identify diversification benefits at the portfolio level. Thus, risky borrowers may have a limited credit-risk level from the lender’s perspective, which facilitates the supply of housing finance.

The effect of public subsidies on corporate R&D investment: An application of the generalized propensity score

Abstract This paper aims to investigate how the effect of public subsidies on corporate R&D investment varies with different levels of public subsidies. Based on the generalized propensity score methodology, we estimate a dose–response function, using a large sample of Chinese manufacturing firms. Our results suggest public subsidies follow an S-shaped relationship and inverted-U correlation with the firm's total R&D and private R&D investment, respectively. There is a saturation point beyond which a further increase in public subsidies does not yield an increase of firm's total R&D investment. A minimum threshold value of public subsidies is required to induce the firm's private R&D spending. There are also critical values beyond which a further increase in public subsidies would partially or completely crowd out a firm's private R&D investment. Our conclusion implies the existence of an optimal interval of subsidy, and thus could help to improve the efficiency of public subsidies.

Efficacia e persistenza dell'effetto dei sussidi pubblici sulla rimozione dei vincoli finanziari delle giovani imprese ad alta tecnologia

The paper analyses the effect of public subsidies on firm investments, using a longitudinal sample of two hundred ninety-four Italian unlisted owner-managed new-technology- based firms (NTBFs) observed from 1994 to 2003. We have adopted a modified version of the Euler equation and the use of GMM-system estimation techniques that duly take into account the endogenous nature of public finance. Our findings indicate that small NTBFs rely significantly on internal capital to finance their investments. Small NTBFs that benefit from public subsidies show an increase in the investment rate and a reduction in investment cash flow sensitivity in the year immediately after that when they received the public funds. We interpret these results as an indication of the relaxation of financial constraints. Moreover, while the increase in the investment rate does not persist in the long run, the dependence of investments on cash flows vanishes immediately after the receipt of public subsidies and remains negligible afterwards.

The Effects of Public Subsidies on R&D Employment: Evidence from OECD Countries

Existing empirical evidence suggests that public subsidies and fiscal incentives have a positive effect on the amount of private R&D expenditure. However, most studies have failed to address the possibility at least some of this increase may simply reflect the fact that R&D workers are being paid higher wages. Such an omission may imply that past research has over-estimated the effectiveness of R&D tax concessions. In the absence of widely-available R&D deflators, we consider the impact of a range of public subsidies on the number of full-time equivalent workers employed in R&D (i.e., researchers) in the business sector. Our findings strongly support the effectiveness of both direct subsidies and fiscal incentives.

The Effect of Public Subsidies on Firms’ Investment-Cash Flow Sensitivity: Transient or Persistent?

This work analyses the effect of public subsidies on firms’ investments and investment–cash flow sensitivity in a longitudinal sample of 288 Italian unlisted non-venture capital backed owner-managed new-technology-based firms (NTBFs), observed over a 15-year period from 1994 to 2008. Seventy five of these firms received one or more public subsidies in the observation period. We use an error correction model (ECM) specification and system generalised method of moment (GMM) techniques that take into account the endogeneity of public subsidies. First, we find that the investments of small NTBFs are sensitive to internal cash flows, while those of large NTBFs are not. Receipt of public subsidies by small NTBFs results in an increased investment rate and a reduced investment–cash flow sensitivity, in the immediately following year. We interpret these results as an indication of the relaxation of financial constraints. Moreover, while the increase in the investment rate does not persist in the long run, the dependence of investments on cash flow remains negligible after receipt of the first public subsidy. These results support the view that public subsidies can help small NTBFs in persistently removing the financial constraints that bind their investment activity.

Efficiency and effectiveness of housing policies in the Central and Eastern Europe countries

The article provides the comparison of state housing policies in six selected Central and Eastern European countries. The description of the basic elements of policy approaches is followed by an analysis of both the efficiency and effectiveness of new supply- and demand-side subsidies. For this purpose the author set particular criteria allowing evaluation of subsidies. According to the results the most effective/efficient subsidies were implemented where general policy orientated towards the rental model was combined with decentralization/deregulation in the rental sector. The worst results appeared in countries where the same orientation of policy was not accompanied by decentralization/deregulation of rental housing. The factor of housing shortage may also influence the level of efficiency and effectiveness of public subsidies.

Pricing and R&D When Consumption Affects Longevity

We analyze goods for which the amount of consumption determines the duration of consumption, focusing on health-related consumption that affects longevity. The characteristics of the demand for such goods lead to unique predictions about private pricing and investment in R&D as well as the fiscal effects of public subsidies and taxes. In particular, we argue that there is an R&D feedback for such goods when the market size expands through longevity-induced population growth. We also argue that as developed countries devote large shares of public spending to old-age programs that may themselves affect longevity, e.g., Medicare and Social Security, the nonstandard effects that these programs introduce may become increasingly important.

Trade Effects of Public Subsidies to Private Enterprise

Trade Effects of Public Subsidies to Private Enterprise