How Do Unexpected E.C.B. And Fed Actions Affect EUR/USD Dynamics?
29 Pages Posted: 10 Nov 2013
Date Written: September 1, 2001
This paper comprehensively calculates corporate intangible assets by industry from 1998 to 2009, and evaluates the impact of expensing intangible assets on the cost of capital, the METR, and the welfare cost of inter-asset taxation, under current law and alternative tax policy including recent policy proposals. It also estimates the welfare cost of 'leveling the playing field'. I find that capitalizing intangible assets can reduce the METR by up to 28 percentage points in finance. The intangible-inclusive welfare cost of inter-asset taxation is twice as large as a conventional measure under current law, and can be much larger than the tax revenue loss of alternative policy. Leveling the playing field may reduce or increase the deadweight loss of inter-asset taxation. The results provide a valuable input for research estimating the impact of investment tax incentives.
Keywords: Central Bank Actions, Expected Interventions, Exchange Rate Dynamics, FI-GARCH Modelling, Market Information
JEL Classification: F31; G14; E58; C32
Suggested Citation: Suggested Citation