Taxes and Firm Investment

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Title: Taxes and Firm Investment
Authors: Arin, K. PerenDevereux, KevinMazur, Mieszko
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Date: Jan-2021
Online since: 2021-01-22T17:07:17Z
Abstract: 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.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 25
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2021/02
Copyright (published version): 2021 the Authors
Keywords: InvestmentTaxationFiscal policyFiscal multiplier
JEL Codes: C33; C53; E62; G32
Language: en
Status of Item: Not peer reviewed
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Appears in Collections:Economics Working Papers & Policy Papers

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