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The effect of investment tax credit: Evidence from an atypical programme in Italy

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  • Raffaello Bronzini

    ()
    (Bank of Italy, Economic Research Department)

  • Guido de Blasio

    ()
    (Bank of Italy, Economic Research Department)

  • Guido Pellegrini

    ()
    (University of Bologna)

  • Alessandro Scognamiglio

    ()
    (Bank of Italy, Catanzaro Branch, Economic Research Unit)

Abstract

This paper examines how business investment responds to investment tax credit, as enacted by ItalyÂ’s Law 388/2000. To assess whether the programme made investments possible that otherwise would not have been made, it exploits some features of the tax credit scheme, such as the fact that some Italian regions are not deemed eligible or that the amount of the bonus differs across eligible regions. Although the programme was fiscally unsustainable, and was therefore downsized well ahead of the expiry date, our findings suggest that it has been effective in stimulating investment.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 661.

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Date of creation: Apr 2008
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Handle: RePEc:bdi:wptemi:td_661_08

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Keywords: investment incentives; state aid;

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Cited by:
  1. Michela Bia & Alessandra Mattei, 2012. "Assessing the effect of the amount of financial aids to Piedmont firms using the generalized propensity score," Statistical Methods and Applications, Springer, vol. 21(4), pages 485-516, November.
  2. Michela Bia & Roberto Leombruni & Pierre-Jean Messe, 2009. "Young in-Old out: a new evaluation based on Generalized Propensity Score," LABORatorio R. Revelli Working Papers Series 93, LABORatorio R. Revelli, Centre for Employment Studies.
  3. Antonella Magliocco & Giacomo Ricotti, 2013. "The new framework for the taxation of venture capital in Italy," Questioni di Economia e Finanza (Occasional Papers) 167, Bank of Italy, Economic Research and International Relations Area.

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