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Tax Policy And Irreversible Investment
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Book Synopsis Tax Policy and Irreversible Investment by : Sumru Altug
Download or read book Tax Policy and Irreversible Investment written by Sumru Altug and published by . This book was released on 2005 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the impact of tax policy uncertainty on the irreversible investment decisions of a monopolistically competitive firm. We consider the impact of tax policy in terms of the investment tax credit (ITC) as well as the stochastic tax wedge which determines the after-tax costs of investing. We show that (i) temporary tax incentives have a greater stimulative impact on investment; (ii) greater policy volatility results in greater variability of investment; (iii) a stochastically larger future tax policy lowers current investment; and (iv) greater variability of tax policy around a constant mean leads to lower investment. We examine changes in the average levels of investment and its variability over short- and long-run horizons. We consider a general 3-state process, a log-normal process, and a Poisson process. We carry out an extensive sensitivity analysis that allows us to examine the impact of changes in real interest rates, and changes in the elasticity of demand facing firms.
Book Synopsis Investment with Uncertain Tax Policy by : Kevin A. Hassett
Download or read book Investment with Uncertain Tax Policy written by Kevin A. Hassett and published by . This book was released on 1994 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: In models with irreversible investment, increasing uncertainty about prices has been shown to increase the required rate of return (hurdle rate) and delay investment (e.g., Pindyck, 1988). One serious form of uncertainty faced by firms, a form that policy makers could conceivably control, is tax uncertainty. In this paper, we show that it does not follow from past work that tax policy uncertainty increases the expected hurdle price ratio and delays investment. This is because tax uncertainty has an unusual form that distinguishes it from price uncertainty: tax rates tend to remain constant for many years, and then change in large jumps. When tax policy follows a jump process, firms' expectations of the likelihood of the jump occurring have important effects on investment. Indeed, as we show below, while price uncertainty increases the hurdle rate and slows down investment, tax uncertainty has the opposite effect
Book Synopsis Impact of Tax Uncertainty on Irreversible Investment by :
Download or read book Impact of Tax Uncertainty on Irreversible Investment written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversibility, Uncertainty, and Investment by : Robert S. Pindyck
Download or read book Irreversibility, Uncertainty, and Investment written by Robert S. Pindyck and published by World Bank Publications. This book was released on 1989 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.
Book Synopsis Tax Policy and Investment by : Kevin A. Hassett
Download or read book Tax Policy and Investment written by Kevin A. Hassett and published by . This book was released on 1996 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book Taxing Wages 2021 written by OECD and published by OECD Publishing. This book was released on 2021-04-29 with total page 651 pages. Available in PDF, EPUB and Kindle. Book excerpt: This annual publication provides details of taxes paid on wages in OECD countries. It covers personal income taxes and social security contributions paid by employees, social security contributions and payroll taxes paid by employers, and cash benefits received by workers. Taxing Wages 2021 includes a special feature entitled: “Impact of COVID-19 on the Tax Wedge in OECD Countries”.
Book Synopsis The Impact of Tax Uncertainty on Irreversible Investment by : Rainer Niemann
Download or read book The Impact of Tax Uncertainty on Irreversible Investment written by Rainer Niemann and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Investment under Uncertainty by : Robert K. Dixit
Download or read book Investment under Uncertainty written by Robert K. Dixit and published by Princeton University Press. This book was released on 2012-07-14 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.
Book Synopsis Investment with Uncertain Tax Policy by : Kevin A. Hassett
Download or read book Investment with Uncertain Tax Policy written by Kevin A. Hassett and published by . This book was released on 2010 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: In models with irreversible investment, increasing uncertainty about prices has been shown to increase the required rate of return (hurdle rate) and delay investment (e.g., Pindyck, 1988). One serious form of uncertainty faced by firms, a form that policy makers could conceivably control, is tax uncertainty. In this paper, we show that it does not follow from past work that tax policy uncertainty increases the expected hurdle price ratio and delays investment. This is because tax uncertainty has an unusual form that distinguishes it from price uncertainty: tax rates tend to remain constant for many years, and then change in large jumps. When tax policy follows a jump process, firms' expectations of the likelihood of the jump occurring have important effects on investment. Indeed, as we show below, while price uncertainty increases the hurdle rate and slows down investment, tax uncertainty has the opposite effect.
Book Synopsis Irreversibility, Uncertainty, and Investment by : Robert S. Pindyck
Download or read book Irreversibility, Uncertainty, and Investment written by Robert S. Pindyck and published by . This book was released on 2010 with total page 75 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most investment expenditures have two important characteristics: First, they are largely irreversible; the firm cannot disinvest, so the expenditures are sunk costs. Second, they can be delayed, allowing the firm to wait for new information about prices, costs, and other market conditions before committing resources. An emerging literature has shown that this has important implications for investment decisions, and for the determinants of investment spending. Irreversible investment is especially sensitive to risk, whether with respect to future cash flows, interest rates, or the ultimate cost of the investment. Thus if a policy goal is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates. This paper presents some simple models of irreversible investment, and shows how optimal investment rules and the valuation of projects and firms can be obtained from contingent claims analysis, or alternatively from dynamic programming. It demonstrates some strengths and limitations of the methodology, and shows how the resulting investment rules depend on various parameters that come from the market environment. It also reviews a number of results and insights that have appeared in the literature recently, and discusses possible policy implications.
Book Synopsis Sunk Costs, Investment and Fiscal Policy by : Aki Yamasaki
Download or read book Sunk Costs, Investment and Fiscal Policy written by Aki Yamasaki and published by . This book was released on 1997 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Progressive Taxation and Irreversible Investment Under Uncertainty by : Luis H. R. Alvarez
Download or read book Progressive Taxation and Irreversible Investment Under Uncertainty written by Luis H. R. Alvarez and published by . This book was released on 2005 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Asymmetries, Uncertainty, and Investment by : Woojin Youn
Download or read book Essays on Asymmetries, Uncertainty, and Investment written by Woojin Youn and published by . This book was released on 1998 with total page 366 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Progressive Taxation & Irreversible Investment under Uncertainty by :
Download or read book Progressive Taxation & Irreversible Investment under Uncertainty written by and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversible Investment Under Uncertainty with Taxation by : Charles Coleman
Download or read book Irreversible Investment Under Uncertainty with Taxation written by Charles Coleman and published by . This book was released on 1995 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversible Investments, Uncertainty, and the Ramsey Policy by : Gaute Torsvik
Download or read book Irreversible Investments, Uncertainty, and the Ramsey Policy written by Gaute Torsvik and published by . This book was released on 1992 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Tax Policy and International Capital Flows by : Martin S. Feldstein
Download or read book Tax Policy and International Capital Flows written by Martin S. Feldstein and published by . This book was released on 1994 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although capital is now generally free to move across national borders, there is strong evidence that savings tend to remain and to be invested in the country where the saving takes place. The current paper examines the apparent conflict between the potential mobility of capital and the observed de facto segmentation of the global capital market. The key to reconciling this 'Feldstein-Horioka paradox' is that, although capital is free to move, its owners, and especially the agents who are responsible for institutional investments, prefer to keep funds close to home because of a combination of risk aversion, ignorance and a desire to show prudence in their investing behavior. The paper presents evidence on the capital mobility and on capital market segmentation. The role of hedging and the difference between gross and net capital movements for individual investors and borrowers are discussed. The special place of foreign direct investment is also considered. The segmentation of the global capital market affects the impact of capital income taxes and subsidies. This is discussed in the final section of the paper.
