Tax-adjusted Q Model with Intangible Assets: Theory and Evidence from Temporary Investment Tax Incentives

Estelle Dauchy () and Sophia Chen ()
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Estelle Dauchy: New Economic School

No w0207, Working Papers from New Economic School (NES)

Abstract: We propose a tax-adjusted q model with physical and intangible assets and estimate the effect of bonus depreciation in the United States in the early 2000s. We find that investment responds moderately to tax incentives; however allowing for heterogeneity reveals that intangible-intensive firms are more responsive than physical-intensive firms and their differences increase with firm size. Accounting for intangible assets increases the estimated total investment response from 3.7 to 14.3 percent among the largest 500 firms. Our results imply that understanding the behavior of large and intangible-intensive firms has important implications for the design and evaluation of investment policy.

Keywords: investment tax incentives; intangible assets; q model of investment; bonus depreciation (search for similar items in EconPapers)
JEL-codes: E01 G31 H25 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2014-09
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Citations: View citations in EconPapers (1)

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https://www.nes.ru/files/Preprints-resh/WP207.pdf (application/pdf)

Related works:
Journal Article: Tax‐Adjusted q Model with Intangible Assets: Theory and Evidence from Temporary Investment Tax Incentives (2017)
Working Paper: Tax-adjusted Q Model with Intangible Assets: Theory and Evidence from Temporary Investment Tax Incentives (2014)
Working Paper: The Tax-adjusted Q Model with Intangible Assets: Theory and Evidence from Temporary Investment Tax Incentives (2014)
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