Optimal Dynamic Investment Policy under Different Rates for Tax Depreciation and Economic Depreciation
AbstractThis paper analyzes the consequences of incorporating a different rate for tax depreciation than for economic depreciation. Firms most often choose their tax depreciation rate in a strategic way. It would therefore be a coincidence if this optimization process leads to a tax depreciation rate that equals the economic depreciation rate. The implications of a difference between tax depreciation and economic depreciation are investigated in an optimal control model for the determination of the firm's optimal investment policy over time.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1999-59.
Date of creation: 1999
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Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-08-15 (All new papers)
- NEP-CDM-1999-08-15 (Collective Decision-Making)
- NEP-FIN-1999-08-15 (Finance)
- NEP-PBE-1999-08-15 (Public Economics)
- NEP-PUB-1999-08-15 (Public Finance)
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