Working Paper: NBER ID: w19630
Authors: Nancy L. Stokey
Abstract: This paper develops a model of investment decisions in which uncertainty about a one-time change in tax policy induces the firm to temporarily stop investing--to adopt a wait-and-see policy. After the uncertainty is resolved, the firm exploits the tabled projects, generating a temporary investment boom.
Keywords: Investment; Policy Uncertainty; Tax Policy
JEL Codes: D92; E22; E32; H32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Uncertainty about tax policy (H29) | Profitability of investments (G11) |
| Profitability of investments (G11) | Investment delay (G31) |
| Uncertainty about tax policy (H29) | Investment delay (G31) |
| Resolution of uncertainty (D80) | Investment boom (E22) |