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  • Ghilardi and Zilberman (2024 EL)

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Dividend Taxation and Financial Business Cycles

Research output: Contribution to Journal/MagazineJournal articlepeer-review

E-pub ahead of print
Article number111709
<mark>Journal publication date</mark>31/05/2024
<mark>Journal</mark>Economics Letters
Number of pages5
Publication StatusE-pub ahead of print
Early online date24/04/24
<mark>Original language</mark>English


We examine the interactions between different dividend tax systems and financial shocks in a dynamic stochastic general equilibrium (DSGE) model with an occasionally-binding investment credit limit. We show that dividend taxes largely determine the collateral value of assets, thereby occasionally distorting investment decisions and altering the propagation of financial shocks. Permanently lower dividend taxes dampen financially-driven business cycles in a state-contingent fashion. They also help explain substantial macroeconomic asymmetries following equally-sized expansionary and contractionary financial shocks.