Intangible investment and Ramsey capital taxation

Juan Carlos Conesa and Begoña Domínguez

Journal of Monetary Economics, 2013, vol. 60, issue 8, 983-995

Abstract: The standard analysis of optimal fiscal policy aggregates different types of assets into a unique capital good and all types of capital taxes into a unique capital tax. This paper considers a disaggregated framework: an economy with corporate and dividend taxes, where firms invest in both tangible and intangible assets (which can be expensed or sweat). In our setup, firms can always respond to changes in the timing of taxation. We find that the optimal long-run policy features zero corporate taxes and positive dividend taxes, with labor and dividend taxes being identical. Moreover, the initial capital levy is relatively small.

Keywords: Optimal policy; Capital taxation; Intangible assets; Time-consistency (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:60:y:2013:i:8:p:983-995

DOI: 10.1016/j.jmoneco.2013.09.004

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