Tax Policy and Investment (AEI Studies on Tax Reform)

by Hassett, Kevin

• ISBN13: 9780844770864
• ISBN10: 0844770868
• Format: Paperback
• Copyright: 1999-05-01
• Publisher: Aei Press

Table of Contents

Foreword	vii
R. Glenn Hubbard
Acknowledgments	ix
Introduction	1	(2)
Background	3	(14)
A Brief Primer of Neoclassical Theory	3	(2)
Early Empirical Results	5	(3)
The Challenge and the First Wave of Responses	8	(3)
Lessons from the Time-Series Data	11	(6)
New Identification Strategies	17	(16)
Using Cross-Sectional Variation to Identify Tax Effects	18	(1)
Measurement Error in Fundamental Variables	19	(5)
Misspecification of Adjustment Costs	24	(6)
Heterogeneity of Capital Stock	30	(1)
Summing Up	31	(2)
Arguments for and Against Lowering Taxes on Capital	33	(14)
Tax Reform Today Could Remove Distortion	33	(1)
Investment Incentives Are Bad because of Interasset Distortions	34	(1)
Failure of Investment Incentives because of Liquidity Constraints	35	(5)
Price Elasticity of Capital Goods	40	(1)
Bondholders	41	(2)
Too Much Capital	43	(4)
Policy Implications	47	(6)
Low Inflation as an Investment Subsidy	47	(2)
Moving to a Consumption Tax	49	(1)
Temporary Tax Incentives?	50	(3)
Conclusions	53	(2)
Notes	55	(4)
References	59	(12)
About the Author	71