IDEAS home Printed from https://ideas.repec.org/p/isa/wpaper/126.html
   My bibliography  Save this paper

The Effectiveness Evaluation of Selected Tax Expenditures: a Novel Approach An Application to Regional Tax Incentives for Business Investment in Italy

Author

Listed:
  • Antonella Caiumi

    () (ISAE - Institute for Studies and Economic Analyses)

Abstract

This study uses data on regional tax incentives for business investments in Italy to ask: How much additional investment was stimulated by the government intervention? Or does public financing displace private financing? To what extent would the outcomes on firm performance not have been achieved without public support? The methodology consists of applying the matching approach in order to select a sample of firms composed by both recipients and non-recipients such that for each subsidised firm is found a comparable unsubsidised counterpart, similar in every respect except for the tax benefit, and then estimate a structural model of investment behaviour with the aim of recovering the tax-price elasticity and testing the sensitivity of investment decisions to the availability of internal funds by taking into account the dynamic structure underlying capital accumulation. The novelty of our approach allows us to deal with the problem of the endogeneity of firms' participation decisions as well as to account for the different channels through which fiscal incentives operate. Finally, the impact of the investment tax credit on TFP levels is identified by modelling productivity dynamics at firm level.

Suggested Citation

  • Antonella Caiumi, 2010. "The Effectiveness Evaluation of Selected Tax Expenditures: a Novel Approach An Application to Regional Tax Incentives for Business Investment in Italy," ISAE Working Papers 126 JEL classification: E, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  • Handle: RePEc:isa:wpaper:126
    as

    Download full text from publisher

    File URL: http://lipari.istat.it/digibib/Working_Papers/WP_126_2010_Caiumi.pdf
    Download Restriction: no

    More about this item

    Keywords

    Investment incentives; Productivity dispersion; State aid;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isa:wpaper:126. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stefania Rossetti). General contact details of provider: http://edirc.repec.org/data/istgvit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.