Research Proposal
ECON 450: Economics of Taxation
The goal of this research proposal is to expose students to empirical research in economics.
Topic: Impacts of Tax Policy for Innovation (Patent Box) on Firms’ R&D Investment
For this research proposal, students have to do the following:
1. Understand the patent box policy implemented in Quebec in 2017. Reference: EconmicPlan.pdf
2. Search for accessible datasets that can be used to study this question (i.e., Statistics Canada:
3. Come up with an empirical strategy to identify the effects of the tax policy on the investment and innovation outcomes.
4. Write a research proposal summarizing your research question, motivation, literature review, institutional details, data sources, empirical design, and potential issues with your design.
Instructions for Writing (5-page max, 1.5 spacing, 1 inch margin, 12 pt Times)
1. Title page: First Name and Last Name and Student ID (include all group members)
2. Introduction: (1) Motivation, (2) Research question, (3) Literature Review (1 page)
3. Institutional Background (1 page)
4. Data Sources and Variable Definitions (1 page)
5. Empirical Design (1 page)
6. Potential issues or limitations of your design (1 page)
7. References
Note:
1. You can work in a group up to 3 people maximum (including yourself) and submit one research proposal as a group.
2. Submit the proposal electronically via email to both me and TA. The file name must be in the following format: econ450_proposal_LastName1_LastName2_LastName3.pdf
3. Deadline: December 18th 11:59 pm. No extension without an academic concession.
Detailed Instructions:
1. Introduction
(a) The motivation has to be academic or policy-oriented. Justify why should we care about your research question?
(b) Clearly state your research question – what are the exact dependent variables and independent variables?
(c) Find three most closely related research papers on this topic and summarize their main setting (which country and time periods), design (empirical model), findings, and limitations.
2. Institutional Background
(a) Describe the institutional and policy background relevant for your empirical framework: when was it implemented and what was exactly the impact of the policy?
(b) Describe the setting and time periods relevant for your study.
(c) Describe the motivation behind the policy change and whether it was anticipated (any news?).
3. Data Sources and Variable Definitions
(a) Describe data sources that one can access in the future (whether publicly or privately). State the names of the data sources and how/where a researcher can access the data.
(b) Describe the datasets in more details: which time periods are covered, which samples (i.e., which types of firms?) are covered, and which variables are available.
(c) Define the key variables (independent, dependent, and control variables) that will be used in your analysis.
4. Empirical Design
(a) Write down an empirical model for your empirical design. For example, describe your key dependent variable(s), independent variable(s), and control variable(s) in an equation.
(b) What is the key identification assumption behind your empirical design? For example, if you’re using an IV design, the key assumptions are (1) relevance and (2) exogeneity.
(c) Describe what are the empirical tests you can implement to show that the identification assumptions are likely satisfied in your setting.
5. Potential Issues or Limitations of your design
(a) Discuss at least two limitations or potential sources of biases and directions (upward or downward) of the biases in your setting.
(b) Discuss reasonable ways in which you can address those issues or show that those potential issues are unlikely to be main concerns in your setting. For example, what kind of empirical tests can you implement to address these potential issues?
