Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform

Francois Gourio and Jianjun Miao

American Economic Journal: Macroeconomics, 2010, vol. 2, issue 1, 131-68

Abstract: To study the long-run effect of dividend taxation on aggregate capital accumulation, we build a dynamic general equilibrium model in which there is a continuum of firms subject to idiosyncratic productivity shocks. We find that a dividend tax cut raises aggregate productivity by reducing the frictions in the reallocation of capital across firms. Our baseline model simulations show that when both dividend and capital gains tax rates are cut from 25 and 20 percent, respectively, to the same 15 percent level permanently, the aggregate long-run capital stock increases by about 4 percent. (JEL D21, E22, E62, G32, G35, H25, H32)

JEL-codes: D21 E22 E62 G32 G35 H25 H32 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/mac.2.1.131
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (68)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/mac.2.1.131 (application/pdf)
http://www.aeaweb.org/aej/mac/data/2008-0079_data.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Firm Heterogeneity and the Long-run Effects of Dividend Tax Reform (2009)
Working Paper: Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform (2008)
Working Paper: Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform (2007)
Working Paper: Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform (2006)
Working Paper: Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejmac:v:2:y:2010:i:1:p:131-68

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Macroeconomics is currently edited by Simon Gilchrist

More articles in American Economic Journal: Macroeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().