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The Impact of Tax Risk and Persistence on Investment Decisions

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  • Sumru Altug

    ()
    (University of York and CEPR)

  • Michel Demers

    ()
    (Carleton University)

Abstract

There is evidence that tax rates have varied considerably through time. In the postwar years, changes in business taxation in the U.S. have occurred at a pace of approximately every three years. The purpose of this research is to examine the implications of tax risk and persistence on irreversible investment decisions.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 5 (2001)
Issue (Month): 1 ()
Pages: 1-5

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Handle: RePEc:ebl:ecbull:eb-01e20001

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  1. Kevin Hassett & Gilbert E. Metcalf, 1994. "Investment with Uncertain Tax Policy: Does Random Tax Policy Discourage Investment?," NBER Working Papers 4780, National Bureau of Economic Research, Inc.
  2. Giuseppe Bertola & Ricardo J. Caballero, 1991. "Irreversibility and Aggregate Investment," NBER Working Papers 3865, National Bureau of Economic Research, Inc.
  3. Hassett, Kevin A. & Hubbard, R. Glenn, 2002. "Tax policy and business investment," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 20, pages 1293-1343 Elsevier.
  4. Donaldson, John B. & Mehra, Rajnish, 1983. "Stochastic growth with correlated production shocks," Journal of Economic Theory, Elsevier, vol. 29(2), pages 282-312, April.
  5. Cabalero, R.J., 1997. "Aggregaete Investment," Working papers 97-20, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Demers, Michel, 1991. "Investment under Uncertainty, Irreversibility and the Arrival of Information over Time," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 333-50, April.
  7. Sumru Altug & Fanny S. Demers & Michel Demers, 2004. "Tax Policy and Irreversible Investment," CDMA Working Paper Series 200404, Centre for Dynamic Macroeconomic Analysis.
  8. Altug, Sumru G. & Demers, Fanny S & Demers, Michel, 2000. "Political Risk And Irreversible Investment: Theory And An Application To Quebec," CEPR Discussion Papers 2405, C.E.P.R. Discussion Papers.
  9. Danthine, Jean-Pierre & Donaldson, John B. & Mehra, Rajnish, 1983. "On the impact of shock persistence on the dynamics of a recursive economy," European Economic Review, Elsevier, vol. 22(2), pages 147-166, July.
  10. Bizer, David S & Judd, Kenneth L, 1989. "Taxation and Uncertainty," American Economic Review, American Economic Association, vol. 79(2), pages 331-36, May.
  11. Jason G. Cummins & Kevin A. Hassett & R. Glenn Hubbard, 1994. "A Reconsideration of Investment Behavior Using Tax Reforms as Natural Experiments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 1-74.
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Cited by:
  1. Pawlina, G. & Kort, P.M., 2001. "Investment Under Uncertainty and Policy Change," Discussion Paper 2001-5, Tilburg University, Center for Economic Research.
  2. Rainer Niemann & Caren Sureth, 2011. "The Impact of Differential Capital Income Taxation on the Value of Risky Projects," Economics Bulletin, AccessEcon, vol. 31(2), pages 1047-1054.
  3. Gries, Thomas & Prior, Ulrich & Sureth, Caren, 2007. "Taxation of risky investment and paradoxical investor behavior," arqus Discussion Papers in Quantitative Tax Research 26, arqus - Arbeitskreis Quantitative Steuerlehre.
  4. Schneider, Georg & Sureth, Caren, 2010. "The impact of profit taxation on capitalized investment with options to delay and divest," arqus Discussion Papers in Quantitative Tax Research 97, arqus - Arbeitskreis Quantitative Steuerlehre.
  5. Paolo M. Panteghini & Carlo Scarpa, 2003. "Irreversible Investments and Regulatory Risk," CESifo Working Paper Series 934, CESifo Group Munich.

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