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A panel data analysis of the long-run effect of environmental taxes on R&D expenditures at the macro-level

Author

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  • Dierk Herzer

    (Helmut-Schmidt-University Hamburg)

Abstract

Whether and how environmental taxes affect R&D at the macro-level is an empirical question that has not been addressed in the literature. This paper fills this gap by examining the impact of environmental taxes on R&D expenditures using panel data for the period 1994-2021 from 49 countries. The main results of this study are as follows: (i) environmental taxes have, on average, a positive long-run effect on R&D expenditures; (ii) the direction of causality runs from environmental taxes to R&D and not from R&D to environmental taxes; and (iii) while the long-run effect of environmental taxes varies across countries, it is positive in almost all cases, suggesting that the average positive long-run effect of environmental taxes on R&D is not driven by a few countries. We also find some evidence of a positive effect of environmental taxes on both environmental and non-environmental R&D, based on a smaller sample of countries over a shorter time period.

Suggested Citation

  • Dierk Herzer, 2024. "A panel data analysis of the long-run effect of environmental taxes on R&D expenditures at the macro-level," Economics Bulletin, AccessEcon, vol. 44(3), pages 1169-1180.
    • Handle: RePEc:ebl:ecbull:eb-24-00331
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    More about this item

    Keywords

    environmental taxes; R&D expenditures; heterogeneous panel data techniques;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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