The effectiveness of investment subsidies: evidence from survey data

This paper investigates the effects of subsidies on the investment decisions of a sample of Italian manufacturing firms. We use survey information on firms� subjective evaluations of the investment they would have undertaken without financing, finding that subsidies have limited effectiveness as a stimulus. Without subsidies, three-quarters of the firms financed would have made the same amount of investment at the same date; most of the remaining firms would have made the same amount of investment at a future date.