IDEAS home Printed from https://ideas.repec.org/p/ags/aaea87/270122.html
   My bibliography  Save this paper

Economic Consequences Of Tax Reform On Agricultural Investment

Author

Listed:
  • LeBlanc, Michael
  • Durst, Ron
  • Hrubovcak, James
  • Conway, Roger

Abstract

The investment effects of five major tax proposals and the Tax Reform Act of 1986 1 are examined by combining an econometrically estimated investment function with the cost of capital associated with each proposal. All the tax proposals increase the cost of capital and amplify current decreases in agricultural capital disinvestment. The proposals are bounded above by the Kemp-Kasten plan which reduces net investment by about $190 million and below by the House plan which accounts for yearly declines in excess of $320 million. In addition, the repeal of the investment tax credit is responsible for about 98 percent of the decline in net investment under the Tax Reform Act of 1986.

Suggested Citation

  • LeBlanc, Michael & Durst, Ron & Hrubovcak, James & Conway, Roger, 1987. "Economic Consequences Of Tax Reform On Agricultural Investment," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270122, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea87:270122
    DOI: 10.22004/ag.econ.270122
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/270122/files/aaea-1987-132.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/270122/files/aaea-1987-132.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.270122?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Martin Feldstein, 1983. "Inflation, Tax Rules, and Investment: Some Econometric Evidence," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 243-286, National Bureau of Economic Research, Inc.
    2. James R. Barth & W. D. Davis & David H. Resler & P. A. V. B. Swamy, 1982. "Detecting and estimating changing economic relationships: the case of discount window borrowings," Special Studies Papers 165, Board of Governors of the Federal Reserve System (U.S.).
    3. Nerlove, Marc, 1972. "Lags in Economic Behavior," Econometrica, Econometric Society, vol. 40(2), pages 221-251, March.
    4. Swamy, P. A. V. B. & Tinsley, P. A., 1980. "Linear prediction and estimation methods for regression models with stationary stochastic coefficients," Journal of Econometrics, Elsevier, vol. 12(2), pages 103-142, February.
    5. Don Fullerton, 1985. "The Indexation of Interest, Depreciation, and Capital Gains: A Model ofInvestment Incentives," NBER Working Papers 1655, National Bureau of Economic Research, Inc.
    6. Alan J. Auerbach & Lawrence H. Summers, 1979. "The Investment Tax Credit: An Evaluation," NBER Working Papers 0404, National Bureau of Economic Research, Inc.
    7. J. P. Gould, 1968. "Adjustment Costs in the Theory of Investment of the Firm," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 35(1), pages 47-55.
    8. Cooley, Thomas F & Prescott, Edward C, 1973. "An Adaptive Regression Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 364-371, June.
    9. Michael LeBlanc & James Hrubovcak, 1986. "The Effects of Tax Policy on Aggregate Agricultural Investment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 767-777.
    10. Treadway, Arthur B., 1974. "The globally optimal flexible accelerator," Journal of Economic Theory, Elsevier, vol. 7(1), pages 17-39, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. LeBlanc, Michael & Hrubovcak, James & Durst, Ron L. & Conway, Roger K., 1992. "Farm Machinery Investment And The Tax Reform Act Of 1986," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(1), pages 1-14, July.
    2. Conway, Roger & Hrubovcak, James & LeBlanc, Michael, 1985. "The Structure of Agricultural Investment: Comparing a Flexible Accelerator with Stochastic Coefficients," Technical Bulletins 157016, United States Department of Agriculture, Economic Research Service.
    3. LeBlanc, Michael & Hrubovcak, James, 1984. "An Analytical Framework For Examining Investment In Agriculture," Staff Reports 277581, United States Department of Agriculture, Economic Research Service.
    4. repec:eee:labchp:v:1:y:1986:i:c:p:473-522 is not listed on IDEAS
    5. Hrubovcak, James & LeBlanc, Michael, 1985. "Tax Policy and Agricultural Investment," Technical Bulletins 157673, United States Department of Agriculture, Economic Research Service.
    6. Anthony N. Rezitis & A. Blake Brown & William E. Foster, 1998. "Adjustment costs and dynamic factor demands for U.S. cigarette manufacturing," Agricultural Economics, International Association of Agricultural Economists, vol. 18(3), pages 217-231, May.
    7. Adrian C. Darnell, 1994. "A Dictionary Of Econometrics," Books, Edward Elgar Publishing, number 118.
    8. Abel, Andrew B., 1990. "Consumption and investment," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 14, pages 725-778, Elsevier.
    9. Hiroki Tsurumi, 1972. "A Comparison of Alternative Optimal Models of Advertising Expenditures: Stock Adjustment vs. Control Theoretic Approaches Applied to Japanese Pharmaceutical Companies," Working Paper 69, Economics Department, Queen's University.
    10. M. Ishaq Nadiri & Ingmar Prucha, 2001. "Dynamic Factor Demand Models and Productivity Analysis," NBER Chapters, in: New Developments in Productivity Analysis, pages 103-172, National Bureau of Economic Research, Inc.
    11. Palle S. Andersen, 1987. "Profit shares, investment and output capacity," BIS Working Papers 12, Bank for International Settlements.
    12. Robert S. Chirinko, 1985. "The Ineffectiveness of Effective Tax Rates on Business Investment," NBER Working Papers 1704, National Bureau of Economic Research, Inc.
    13. Freebairn, John W., 1973. "Some Estimates of Supply and Inventory Response Functions for the Cattle and Sheep Sector of New South Wales," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 41(02-3), pages 1-38, June.
    14. LeBlanc, Michael & Lutton, Thomas, 1984. "Testing For Disequilibrium In The Demand For Agricultural Inputs," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 9(1), pages 1-11, July.
    15. Bermperoglou, Dimitrios & Deli, Yota & Kalyvitis, Sarantis, 2019. "Investment tax incentives and their big time-to-build fiscal multiplier," Kiel Working Papers 2143, Kiel Institute for the World Economy (IfW Kiel).
    16. Perego, Erica, 2020. "Sovereign risk and asset market dynamics in the euro area," Journal of International Money and Finance, Elsevier, vol. 109(C).
    17. Rajagopal, Dagmar & Shah, Anwar, 1995. "A rational expectations model for tax policy analysis: An evaluation of tax incentives for the textile, chemical and pharmaceutical industries of Pakistan," Journal of Public Economics, Elsevier, vol. 57(2), pages 249-276, June.
    18. Freebairn, John W. & Rausser, Gordon C., 1974. "Updating Parameter Estimates: A Least Squares Approach with an Application to the Inventory of Beef Cows," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 42(02), pages 1-17, June.
    19. Hallegatte, Stephane & Bangalore, Mook & Bonzanigo, Laura & Fay, Marianne & Narloch, Ulf & Rozenberg, Julie & Vogt-Schilb, Adrien, 2014. "Climate change and poverty -- an analytical framework," Policy Research Working Paper Series 7126, The World Bank.
    20. Tryphon Kollintzas, 1986. "Tax Policy under Nongeometric Physical Depreciation," Public Finance Review, , vol. 14(3), pages 263-288, July.
    21. William A. Barnett & Milka Kirova & Meenakshi Pasupathy, 1996. "Technology Modeling: Curvature is not Sufficient for Regularity," Econometrics 9602002, University Library of Munich, Germany, revised 24 Jun 1999.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea87:270122. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://www.aaea.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.