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Tax reforms and investment: A cross-country comparison

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Listed author(s):
  • Cummins, Jason G.
  • Hassett, Kevin A.
  • Hubbard, R. Glenn

Abstract

We use firm-level panel data to explore the extent to which fixed investment responds to tax reforms in 14 OECD countries. Previous studies have often found that investment does not respond to changes in the marginal cost of investment. We identify some of the factors responsible for this finding and employ an estimation procedure that sidesteps the most important of them. In so doing, we find evidence of statistically and economically significant investment responses to tax changes in 12 of the 14 countries.

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File URL: http://www.sciencedirect.com/science/article/pii/0047-2727(96)01580-0
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 62 (1996)
Issue (Month): 1-2 (October)
Pages: 237-273

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Handle: RePEc:eee:pubeco:v:62:y:1996:i:1-2:p:237-273
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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Find related papers by JEL classification:
  • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
  • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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