Tag Archives: Investment

Investment Hangover and the Great Recession

From Alp Simsek, Andrei Sheifer, and Matthew Rognile: We present a model of investment hangover motivated by the Great Recession. In our model, overbuilding of residential capital requires a reallocation of productive resources to nonresidential sectors, which is facilitated by … Continue reading

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Quasi-Experimental Evidence on The Connection Between Property Taxes and Residential Capital Investment

From Byron Lutz: Do low property taxes attract residential capital investment? This question is answered using an unusual school finance reform in the state of New Hampshire. The reform induced large shifts in property tax burdens and this shock is used … Continue reading

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Competing for Global Capital or Local Voters? The Politics of Business Location Incentives

From Nathan Jensen, Edmund Malesky, Matthew Walsh: The competition for global capital has led to wars between countries, states, and cities, as to who can offer the most attractive fiscal incentives to firms. In this study, we examine the domestic politics of … Continue reading

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The Effect of Uncertainty on Investment: Evidence from Texas Oil Drilling

From Ryan Kellogg: This paper estimates the response of investment to changes in uncertainty using data on oil drilling in Texas and the expected volatility of the future price of oil. Using a dynamic model of firms’ investment problem, I find … Continue reading

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Is it too late to get an arborist into the budget negotiations?

From Austan Goolsbee: Most of us watching the looming budget showdown do so with a sense of dread. The last one left congressional approval at 9%, the president’s popularity at a new low, and consumer confidence at levels not seen … Continue reading

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Do Financial Frictions Amplify Fiscal Policy? Evidence from Business Investment Stimulus

From Erik Zwick and James Mahon: We estimate the causal effect of temporary tax incentives on equipment investment using a difference-in-differences design and policy shifts in accelerated depreciation. Analyzing data for over 120,000 US firms from 1993 to 2010, we present … Continue reading

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Do Tax Credits Stimulate R&D Spending? The Effect of the R&D Tax Credit in its First Decade

From Nirupama Rao: This paper examines the impact of the R&D tax credit between 1981-1991 using confidential IRS data from corporate tax returns. The key advances on previous work are an instrumental variables strategy based on tax law changes that addresses … Continue reading

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A Corporate Tax Proposal from Larry Summers

From Larry Summers: The US should eliminate the distinction between repatriated and unrepatriated foreign corporate profits for US companies and tax all foreign income (after allowance for taxes paid to other governments) at a fixed rate well below the current … Continue reading

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Profits without Production

Paul Krugman has an interesting op-ed out today linking economic rents to the pace of the recovery.  Since profits are high while borrowing costs are low, why aren’t we seeing a boom in business investment? And, no, investment isn’t depressed … Continue reading

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Great Questions from Paul Krugman

Why have profits been so strong in a weak economy? Why, with profits so high, don’t businesses find reason to invest more (equipment investment is actually fairly strong, but construction remains weak). (For the seriously wonkish, why do average and marginal … Continue reading

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