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Permanent and transitory effects of fiscal policy on investment in the UK

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  • Michael Sumner

Abstract

A major change in the British corporate tax system had only a weak effect on the level of manufacturing investment, but caused a large and highly significant reduction in its seasonal variance. The explanation of this change sheds new light on the impact of pre-announced tax changes.

Suggested Citation

  • Michael Sumner, 1998. "Permanent and transitory effects of fiscal policy on investment in the UK," Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 57-62.
    • Handle: RePEc:taf:applec:v:30:y:1998:i:1:p:57-62
    DOI: 10.1080/000368498326146
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    References listed on IDEAS

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    1. Jason G. Cummins & Kevin A. Hassett & R. Glenn Hubbard, 1994. "A Reconsideration of Investment Behavior Using Tax Reforms as Natural Experiments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 1-74.
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    4. Robson, Mark H., 1989. "Measuring the cost of capital when taxes are changing with foresight," Journal of Public Economics, Elsevier, vol. 40(3), pages 261-292, December.
    5. Bean, Charles R, 1981. "An Econometric Model of Manufacturing Investment in the UK," Economic Journal, Royal Economic Society, vol. 91(361), pages 106-121, March.
    6. Summer, Michael, 1992. "Fiscal policy, seasonality, and intertemporal substitution of investment spending in the UK," Journal of Public Economics, Elsevier, vol. 49(1), pages 123-134, October.
    7. Steve Bond & Kevin Denny & Michael Devereux, 1993. "Capital allowances and the impact of corporation tax on investment in the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 14(2), pages 1-14, May.
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