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The destabilizing effect of company income taxation

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  • Peter A. Schmid

    ()
    (Catholic University Eichstätt-Ingolstadt, School of Management, Eichstätt-Ingolstadt, Germany)

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    Abstract

    This paper examines the effects of company income taxation. Therefore, a tax system is implemented in a dynamic, stochastic macroeconomic model with endogenous financial structure. In addition to the long-term level effects that are in line with the deterministic public economics literature, cyclical effects are identified. Besides insurance incidences, company income taxation implies amplifying effects. Depending on the model’s frictions, the latter can dominate and lead to more volatile business cycles.

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    Bibliographic Info

    Article provided by Akadémiai Kiadó, Hungary in its journal Society and Economy.

    Volume (Year): 35 (2013)
    Issue (Month): 3 (September)
    Pages: 365-388

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    Handle: RePEc:aka:soceco:v:35:y:2013:i:3:p:365-388

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    Related research

    Keywords: company income taxation; tax incidences; DSGE modeling; business cycles;

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    References

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