Tax Reforms and Investment: A Cross-Country Comparison
47 Pages Posted: 30 Jun 2000 Last revised: 26 Oct 2022
Date Written: August 1995
Abstract
We use firm-level panel data to explore the extent to which fixed investment responds to tax reforms in 14 OECD countries. Previous studies have often found that investment does not respond to changes in the marginal cost of investment. We identify some of the factors responsible for this finding and employ an estimation procedure that sidesteps the most important of them. In so doing, we find evidence of statistically and economically significant investment responses to tax changes in 12 of the 14 countries.
Suggested Citation: Suggested Citation
Cummins, Jason Gustav and Hassett, Kevin A. and Hubbard, Robert Glenn, Tax Reforms and Investment: A Cross-Country Comparison (August 1995). NBER Working Paper No. w5232, Available at SSRN: https://ssrn.com/abstract=225296
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