Taxation and Private Investment: Evidence for Chile
AbstractAlong with several structural reforms, Chile embarked upon a major income tax reform in the eighties. Its basic feature was a significant reduction in the corporate income tax rate. The purpose of this paper is to investigate empirically the link between the tax reform and the investment performance of Chile since the reform. Macroeconomic and microeconomic evidence is found to be consistent with the hypothesis of the reduction in the corporate income tax as being one of the determinants of the investment boom of the late eighties and nineties in Chile. Macro data for the period 1975-2003 are used and the evidence indicates that the tax reform explains an increase in private investment of three percentage points of the GDP. On the other hand, information on 87 publicly held companies is used to construct a panel for the period 1980-2002. The microeconomic evidence confirms that investment was positively affected by the tax reform.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 268.
Date of creation: 2004
Date of revision:
Private investmen; corporate income tax; userÂ’s cost of capital;
Other versions of this item:
- R. Vergara, 2010. "Taxation and private investment: evidence for Chile," Applied Economics, Taylor and Francis Journals, vol. 42(6), pages 717-725.
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chang-Tai Hsieh & Jonathan A. Parker, 2006.
"Taxes and Growth in a Financially Underdeveloped Country: Evidence from the Chilean Investment Boom,"
NBER Working Papers
12104, National Bureau of Economic Research, Inc.
- Chang-Tai Hsieh & Jonathan A. Parker, 2007. "Taxes and Growth in a Financially Underdevelopped Country: Evidence from the Chilean Investment Boom," Journal of LACEA Economia, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
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- Rodrigo Cerda & Felipe LarraÃn, 2005. "InversiÃ³n Privada e Impuestos Corporativos: Evidencia para Chile," Documentos de Trabajo 297, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Rodrigo Vergara, 2005. "Productividad en Chile: Determinantes y DesempeÃ±o," Documentos de Trabajo 296, Instituto de Economia. Pontificia Universidad Católica de Chile..
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