Taxes and Firm Investment
Kerim Arin (),
Kevin Devereux and
No 202102, Working Papers from School of Economics, University College Dublin
We investigate the firm level investment responses to narrative shocks to average personal and corporate tax rates using a universal micro dataset of publicly traded U.S firms for the post- 1962 period. By allowing for heterogeneous effects over the business cycle and accompanying monetary policy regime, as well as over firm-level characteristics, we show that : (i) corporate tax multipliers are negative overall, but this result is driven by smaller firms who face larger borrowing constraints, especially during high-unemployment periods or when the accompanying monetary policy is contractionary; (ii) while the magnitude and the significance of personal income tax multipliers are smaller on the aggregate, there is some evidence of positive personal tax multipliers in high-unemployment state by large (dividend-paying) firms, which is consistent with the recent literature.
Keywords: Investment; Taxation; Fiscal policy; Fiscal multiplier (search for similar items in EconPapers)
JEL-codes: C33 C53 E62 G32 (search for similar items in EconPapers)
Pages: 25 pages
New Economics Papers: this item is included in nep-cfn, nep-mac and nep-pbe
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http://hdl.handle.net/10197/11868 First version, 2021 (application/pdf)
Working Paper: Taxes and firm investment (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:202102
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