Tax policy, investment decisions and economic growth

Manuel Bonucchi, Monica Ferrari, Stefania Tomasini and Tsvetomira Tsenova

Revue de l'OFCE, 2015, vol. N° 141, issue 5, 225-262

Abstract: This paper evaluates the impact of the taxation system on production factor costs, investment and economic activity. This is performed on the basis of detailed analysis of the Italian tax system and the production of own estimates of the user cost of capital to labour, which capture the contribution of tax rates, tax incentives and other underlying factors. The study identifies the link between user cost and investment in the context of a full econometric model of investment demand determinants that includes aggregate demand, expectations and uncertainty. Finally, the study evaluates the past contribution of taxation to investment and economic activity, and assesses the impact of future tax reform proposals.

Keywords: corporate taxation; user cost of capital; labour cost; investment; policy evaluation and modelling; expectations; uncertainty (search for similar items in EconPapers)
Date: 2015
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