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tax Reforms and Investment: A Cross-Country Comparison

  • Cummins, J.G.
  • Hassett, K.A.
  • Hubbard, R.G.

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://econ.as.nyu.edu/docs/IO/9386/RR95-28.pdf
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Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number 95-28.

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Length: 26 pages
Date of creation: 1995
Date of revision:
Handle: RePEc:cvs:starer:95-28
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Phone: (212) 998-8936
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Web page: http://econ.as.nyu.edu/object/econ.cvstarr.html
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