Working Paper: NBER ID: w5683
Authors: Kevin A. Hassett; R. Glenn Hubbard
Abstract: In this paper, we summarize recent advances in the study of effects of tax policy on the fixed investment decisions of firms. We attempt to identify consensus where it has been achieved and to highlight important unresolved issues. In addition, we discuss the implications of recent findings for the analysis of policy options, and discuss arguments for and against long-run tax policy that favors business investment spending.
Keywords: tax policy; investment; business investment; capital investment
JEL Codes: H25; E22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tax policy (H20) | firm investment decisions (G32) |
| tax incentives (like investment tax credits and accelerated depreciation) (H32) | firm investment decisions (G32) |
| tax policy (H20) | marginal cost of capital (G31) |
| marginal cost of capital (G31) | firm investment decisions (G32) |