Investment Tax Credit in an Open Economy
This paper contrasts the effects of a permanent and temporary investment tax credit in an open economy. In both cases an ITC will initially stimulate investment, while reducing employment and output, and generating a current account deficit. If the ITC is permanent, the accumulation of capital leads to a higher equilibrium capital stock, higher employment and output, and a reduction in the economy's stock of net credit. If the ITC is temporary, after its removal, the economy eventually moves to a new steady-state equilibrium having a lower permanent capital stock and employment, together with a higher stock of net credit.
|Date of creation:||Mar 1990|
|Date of revision:|
|Publication status:||published as Journal of Public Economics, Vol. 42, No. 3, pp. 277-299, (August 1990).|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sen, Partha & Turnovsky, Stephen J., 1989.
"Deterioration of the terms of trade and capital accumulation: A re-examination of the Laursen-Metzler effect,"
Journal of International Economics,
Elsevier, vol. 26(3-4), pages 227-250, May.
- Partha Sen & Stephen J. Turnovsky, 1988. "Deterioration of the Terms of Trade and Capital Accumulation: A Reexamination of the Laursen-Metzler Effect," NBER Working Papers 2616, National Bureau of Economic Research, Inc.
- Andrew B. Abel & Olivier J. Blanchard, 1982.
"An Intertemporal Model of Saving and Investment,"
NBER Working Papers
0885, National Bureau of Economic Research, Inc.
- Maurice Obstfeld & Alan C. Stockman, 1983.
NBER Working Papers
1230, National Bureau of Economic Research, Inc.
- Buiter, Willem H., 1984.
"Policy Evaluation and Design for Continuous Time Linear Rational Expectations Models: Some Recent Developments,"
CEPR Discussion Papers
15, C.E.P.R. Discussion Papers.
- Willem H. Buiter, 1984. "Policy evaluation and design for continuous time linear rational expectations models: some recent development," NBER Technical Working Papers 0034, National Bureau of Economic Research, Inc.
- Willem H. Buiter, 1984.
"Fiscal policy in open, interdependent economies,"
NBER Working Papers
1429, National Bureau of Economic Research, Inc.
- Abel, Andrew B., 1982. "Dynamic effects of permanent and temporary tax policies in a q model of investment," Journal of Monetary Economics, Elsevier, vol. 9(3), pages 353-373.
- Francesco Giavazzi & Wyplosz, .
"The Real Exchange Rate, the Current Account and the Speed of Adjustment,"
Rodney L. White Center for Financial Research Working Papers
13-82, Wharton School Rodney L. White Center for Financial Research.
- Francesco Giavazzi & Charles Wyplosz, 1984. "The Real Exchange Rate, the Current Account, and the Speed of Adjustment," NBER Chapters, in: Exchange Rate Theory and Practice, pages 335-356 National Bureau of Economic Research, Inc.
- Matsuyama, Kiminori, 1987. "Current account dynamics in a finite horizon model," Journal of International Economics, Elsevier, vol. 23(3-4), pages 299-313, November.
- Obstfeld, Maurice, 1989.
"Fiscal deficits and relative prices in a growing world economy,"
Journal of Monetary Economics,
Elsevier, vol. 23(3), pages 461-484, May.
- Maurice Obstfeld, 1988. "Fiscal Deficits and Relative Prices in a Growing World Economy," NBER Working Papers 2725, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3298. 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: ()
If references are entirely missing, you can add them using this form.