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The effect of investment tax credit: Evidence from an atypical programme in Italy

  • Raffaello Bronzini

    ()

    (Bank of Italy, Economic Research Department)

  • Guido de Blasio

    ()

    (Bank of Italy, Economic Research Department)

  • Guido Pellegrini

    ()

    (University of Bologna)

  • Alessandro Scognamiglio

    ()

    (Bank of Italy, Catanzaro Branch, Economic Research Unit)

This paper examines how business investment responds to investment tax credit, as enacted by Italy�s Law 388/2000. To assess whether the programme made investments possible that otherwise would not have been made, it exploits some features of the tax credit scheme, such as the fact that some Italian regions are not deemed eligible or that the amount of the bonus differs across eligible regions. Although the programme was fiscally unsustainable, and was therefore downsized well ahead of the expiry date, our findings suggest that it has been effective in stimulating investment.

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 661.

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Date of creation: Apr 2008
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Handle: RePEc:bdi:wptemi:td_661_08
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Web page: http://www.bancaditalia.it

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