innovative activities of German service firms. We investigate whether firms that receive public subsidies for innovation projects … innovative activities. The more grants a firm has received in the past, the more it invests in current innovation projects …

-in-differences design to causally identify the short-run impact of COVID-19 on innovation spending in 2020 and expected innovation spending … substantially reduced innovation expenditure not only in the first year of the pandemic (2020) but also in the two subsequent years …, indicating ’Long–Covid’ effects on innovation. In 2020, innovation expenditure fell by 4.7 % due to the pandemic. In 2022 …