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Corporate Taxes, Leverage, and Business Cycles

João Gomes (), Amir Yaron and Brent Glover
Additional contact information
Amir Yaron: The Wharton School, University of Pennsylvania and NBER
Brent Glover: The Wharton School, University of Pennsylvania

No 1261, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: the consequences of this policy for economy-wide quantities such as investment and consumption. Contrary to conventional wisdom we find that changes in tax policy have only a small effect on equilibrium levels of corporate leverage. The intuition lies in the endogenous adjustment of debt prices in equilibrium that make debt relatively more attractive and largely offset the effect of the changes in tax policy.

Date: 2010
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Related works:
Working Paper: Corporate Taxes, Leverage, and Business Cycles
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