This paper examines how business investment responds to investment tax credit, as enacted by Italy's Law 388/2000. To assess whether the programme made investments possible that otherwise would not have been made, it exploits some features of the tax credit scheme, such as the fact that some...

Investment subsidies to private firms have been one of the most popular place-based policies in developed countries; however, the empirical evidence to date is still mixed and there is no general consensus on the effectiveness of such policy. Most evaluation studies have focused on the policy...