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Accelerated depreciation and investment-driven growth: a Marx-Okishio approach

Author

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  • Chong Liu

    (University of Cambridge)

  • Bangxi Li

    (Tsinghua University, Tsinghua University)

  • Jim Huangnan Shen

    (Fudan University, Fudan University)

Abstract

Accelerated depreciation of fixed assets is a representative tax reduction policy. While existing empirical studies have primarily focused on the micro perspective, there is a lack of literature systematically quantifying its macro-level economic impact. Based on Marxist political economy and drawing on Okishio’s theory of accumulation, we propose an analysis framework integrating the reproduction of fixed capital into the overall reproduction of aggregate social capital. This study aims to examine whether, and to what extent, accelerated depreciation can promote economic growth, using China’s input-output data from 1981 to 2020. The findings reveal that accelerated depreciation positively impacts economic growth, primarily driven by new investments. This impact becomes more significant as the depreciation period shortens. However, it is essential to note that shortening the depreciation period also leads to a negative adjustment effect due to increased costs. Theoretical implications for policymaking need a systematic perspective on the role of accelerated depreciation and investment-driven growth.

Suggested Citation

  • Chong Liu & Bangxi Li & Jim Huangnan Shen, 2025. "Accelerated depreciation and investment-driven growth: a Marx-Okishio approach," Evolutionary and Institutional Economics Review, Springer, vol. 22(1), pages 181-211, April.
    • Handle: RePEc:spr:eaiere:v:22:y:2025:i:1:d:10.1007_s40844-025-00301-w
    DOI: 10.1007/s40844-025-00301-w
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    References listed on IDEAS

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    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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