Effectiveness of the Portuguese R&D tax credit

Abstract

The effects of the Portuguese R&D tax credit (SIFIDE) on R&D investment are assessed using Nearest Neighbor Matching and Difference-in-Differences. The impact is tested in the year the program is reintroduced allowing matching in the absence of the instrument. The impact is measured over almost the universe of corporations but requires the use of Intangible investment as a proxy for R&D expenditure. The hypothesis of full crowding-out is rejectd. The specification is repeated at a smaller sample level to contrast the proxy with actual R&D expenditure and similar results with higher significance are obtained.