Inflation, Tax Rules, and the Long Term Interest Rates
Although the return to capital is a focus of research in both macroeconomics and public finance, each specialty has approached this subject with an almost total disregard for the other's contribution. Macroeconomic studies of the effect of inflation on the rate of interest have implicitly ignored the existence of taxes and the problems of tax depreciation. Similarly, empirical studies of the incidence of corporate tax changes have not recognized that the effect of the tax depends on the rate of inflation and have ignored the information on the rate of return that investors receive in financial markets. Our primary purpose in this paper is to begin to build a bridge between these two approaches to a common empirical problem.
|Date of creation:||Jan 1979|
|Publication status:||published as Feldstein, Martin and Summers, Lawrence. "Inflation, Tax Rules, and the Long-Term Interest Rate." Brookings Papers on Economic Activity, Vol. 1, (1978), pp. 61-109.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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