Promoting Investment under International Capital Mobility: An Intertemporal General Equilibrium Analysis
AbstractEfficiency and distributional effects of two investment-oriented policies, an investment tax credit and a reduction in the statutory corporate income tax rate, are compared using a disaggregated general equilibrium model that uniquely combines intertemporal decision-making and international capital mobility. The domestic welfare consequences of these policies depend not only on intertemporal and intersectoral efficiency effects but also on international transfer effects, which favor (in terms of domestic welfare) the investment tax credit over cuts in the corporate tax rate. Simulations reveal important differences between policies in the consequences for balance of payments accounts, the real exchange rate, and industrial structure. Copyright 1993 by The editors of the Scandinavian Journal of Economics.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.
Volume (Year): 95 (1993)
Issue (Month): 2 ()
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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
Other versions of this item:
- Bovenberg, A.L. & Goulder, L.H., 1993. "Promoting investment under international capital mobility: An intertemporal general equilibrium analysis," Open Access publications from Tilburg University urn:nbn:nl:ui:12-152978, Tilburg University.
- A. Lans Bovenberg & Lawrence H. Goulder, 1989. "Promoting Investment under International Capital Mobility: An Intertemporal General Equilibrium Analysis," NBER Working Papers 3139, National Bureau of Economic Research, Inc.
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