Inflation, Tax Rules and the Accumulation of Residential and Nonresidential Capital
AbstractThe present paper analyses the effect of the interaction between tax rules and inflation on the size and allocation of the capital stock with particular emphasis on the role of owner-occupied housing. The analysis is developed in the framework of an economy that is in equilibrium and in which a constant fraction of disposable income is saved. In this model, I show that, with current U.S. tax laws, an increase in the rate of inflation reduces the equilibrium amount of business capital employed in the economy and raises the amount of housing capital. The analysis also shows that a higher rate of inflation lowers the real net-of-tax rate of return to the provider of business capital. In a richer model than the current one, i.e., in a model in which the rate of personal saving was an increasing function of the net rate of return, a higher inflation rate would therefore lower the rate of saving. The present analysis also shows that permitting firms to depreciate investments more rapidly for tax purposes increases the accumulations of business capital but that, unless firms are permitted to expense all in- vestment immediately, an increase in inÃÂ£ lat ion continues to depress the accumulation of business capital.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.
Volume (Year): 84 (1982)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
Other versions of this item:
- Martin Feldstein, 1983. "Inflation, Tax Rules, and the Accumulation of Residential and Nonresidential Capital," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 81-100 National Bureau of Economic Research, Inc.
- Martin Feldstein, 1982. "Inflation, Tax Rules, and the Accumulation of Residential and Nonresidential Capital," NBER Working Papers 0753, National Bureau of Economic Research, Inc.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Sherwin Rosen & Robert H. Topel, 1986.
"A Time-Series Model of Housing Investment in the U.S,"
NBER Working Papers
1818, National Bureau of Economic Research, Inc.
- Robert Topel & Sherwin Rosen, 1985. "A Time Series Model of Housing Investment in the U.S," UCLA Economics Working Papers 387, UCLA Department of Economics.
- Berkovec, James & Fullerton, Don, 1989.
"The General Equilibrium Effects of Inflation on Housing Consumption and Investment,"
American Economic Review,
American Economic Association, vol. 79(2), pages 277-82, May.
- James Berkovec & Don Fullerton, 1989. "The General Equilibrium Effects of Inflation on Housing Consumption and Investment," NBER Working Papers 2826, National Bureau of Economic Research, Inc.
- Joseph Gyourko & Richard Voith, 1997. "Does the U.S. tax treatment of housing promote suburbanization and central city decline?," Working Papers 97-13, Federal Reserve Bank of Philadelphia.
- Gervais, Martin, 2002.
"Housing taxation and capital accumulation,"
Journal of Monetary Economics,
Elsevier, vol. 49(7), pages 1461-1489, October.
- Martin Feldstein, 1982. "Capital Taxation," NBER Working Papers 0877, National Bureau of Economic Research, Inc.
- Richare Voith, 1999. "Does the tax treatment of housing create an incentive for exclusionary zoning and increased decentralization?," Working Papers 99-22, Federal Reserve Bank of Philadelphia.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.