Inflation, Tax Rules, and the Long Term Interest Rates

Martin Feldstein and Lawrence Summers

No 232, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Although the return to capital is a focus of research in both macroeconomics and public finance, each specialty has approached this subject with an almost total disregard for the other's contribution. Macroeconomic studies of the effect of inflation on the rate of interest have implicitly ignored the existence of taxes and the problems of tax depreciation. Similarly, empirical studies of the incidence of corporate tax changes have not recognized that the effect of the tax depends on the rate of inflation and have ignored the information on the rate of return that investors receive in financial markets. Our primary purpose in this paper is to begin to build a bridge between these two approaches to a common empirical problem.

Date: 1979-01
Note: PE
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Published as Feldstein, Martin and Summers, Lawrence. "Inflation, Tax Rules, and the Long-Term Interest Rate." Brookings Papers on Economic Activity, Vol. 1, (1978), pp. 61-109.
Published as Inflation, Tax Rules, and the Long-term Interest Rate , Martin Feldstein, Lawrence Summers. in Inflation, Tax Rules, and Capital Formation , Feldstein. 1983

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Chapter: Inflation, Tax Rules, and the Long-term Interest Rate (1983)
Journal Article: Inflation, Tax Rules, and the Long Term-Interest Rate (1978)
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