Estimating the Economic Effects of Federally Funded R&D: Working Paper 2026-08
Working Paper
CBO describes its current analytical framework for modeling the economic effects of changes in federal funding for R&D, focusing on two approaches that CBO has developed: an R&D capital stock approach and an R&D components approach.
By Sheila Campbell, Jaeger Nelson, Eli Schrag, Heidi Williams, and Caleb Wroblewski.
In recent years, there has been Congressional interest in changing various policies related to research and development (R&D). Recent legislation has included provisions that would modify federal funding for R&D investments and tax provisions affecting the after-tax price of R&D. The Congressional Budget Office (CBO) has developed analytical frameworks for estimating how changes in R&D investments affect the economy and the federal budget. This paper describes the agency's current analytical framework for modeling the economic effects of changes in federal funding for R&D, focusing on two distinct approaches that CBO has developed: an R&D capital stock approach and an R&D components approach.
