Taxation and Corporate Investment: The Impact of the 1991 Swedish Tax Reform
In 1990, the government of Sweden introduced a major tax reform to take effect in 1991. The Swedish system prior to the legislation was so complex that the size and magnitude of the likely effects of the reform on incentives to invest were unknown. In this paper, we draw on Södersten (1989) and Auerbach and Hassett (1992) and derive an expression for the user cost of capital that captures the essential features of the Swedish tax code both before and after the reform. We estimate the model for investment in equipment and find that the responsiveness of Swedish firms to the user cost is quite similar to that found for the U.S. Finally, we employ our model and estimates to assess the effects of the 1991 reform. We find that the impact of the reform on investment is likely to have been minor and had little to do with the contemporaneous sharp drop in investment.
|Date of creation:||Jul 1995|
|Publication status:||published as Swedish Economic Policy Review, vol. 2, no. 2, pp. 361-383, Autumn 1995.|
|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.:
- Auerbach, Alan J, 1989.
"Tax Reform and Adjustment Costs: The Impact on Investment and Market Value,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 939-962, November.
- Alan J. Auerbach, 1986. "Tax Reform and Adjustment Costs: The Impact on Investment and Market Value," NBER Working Papers 2103, National Bureau of Economic Research, Inc.
- Bergstrom, Villy & Sodersten, Jan, 1984. " Do Tax Allowances Stimulate Investment?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(2), pages 244-268.
- Dufwenberg, Martin & Koskenkylä, Heikki & Södersten, Jan, 1994. "Manufacturing investment and taxation in the Nordic countries," Research Discussion Papers 8/1994, Bank of Finland.
- Auerbach, Alan J. & Hassett, Kevin, 1992. "Tax policy and business fixed investment in the United States," Journal of Public Economics, Elsevier, vol. 47(2), pages 141-170, March.
- Alan J. Auerbach & Kevin Hassett, 1991. "Tax Policy and Business Fixed Investment in the United States," NBER Working Papers 3619, National Bureau of Economic Research, Inc.
- Sodersten, Jan, 1989. " The Investment Funds System Reconsidered," Scandinavian Journal of Economics, Wiley Blackwell, vol. 91(4), pages 671-687.
- Södersten, Jan, 1986. "The Investment Funds System Reconsidered," Working Paper Series 174, Research Institute of Industrial Economics, revised Jan 1988.
- Dufwenberg, Martin & Koskenkyla, Heikki & Sodersten, Jan, 1994. " Manufacturing Investment and Taxation in the Nordic Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(3), pages 443-461.
- John B. Taylor, 1982. "The Swedish Investment Funds System as a Stabilization Rule," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 13(1), pages 57-106. Full references (including those not matched with items on IDEAS)