Accepted author manuscript, 154 KB, PDF document
Available under license: CC BY: Creative Commons Attribution 4.0 International License
Final published version
Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
}
TY - JOUR
T1 - Dividend Taxation and Financial Business Cycles
AU - Ghilardi, Matteo F.
AU - Zilberman, Roy
PY - 2024/5/31
Y1 - 2024/5/31
N2 - 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.
AB - 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.
KW - Occasionally-Binding Borrowing Constraints
KW - Investment
KW - Asset Prices
KW - Financial Shocks
U2 - 10.1016/j.econlet.2024.111709
DO - 10.1016/j.econlet.2024.111709
M3 - Journal article
VL - 238
JO - Economics Letters
JF - Economics Letters
SN - 0165-1765
M1 - 111709
ER -