Abstract
In this paper, we try to examine whether the tax credit program for gross R & D enforced in 2003 induced additional R & D investment in Japanese firms. We apply difference-in-difference model to estimate the impact of the tax credit by using the firm level data of the official statistics. We find no evidence that the firms which received the new tax credit significantly increase. their R & D expenditure as compared to non received ones. Our result doesn't change though we use several sub-samples to check its robustness. This indicates that there is room to improve existing tax credit program for R & D in Japan.
