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Macroeconomic Effects of Dividend Taxation with Investment Credit Limits

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Macroeconomic Effects of Dividend Taxation with Investment Credit Limits. / Ghilardi, Matteo F.; Zilberman, Roy.
In: Journal of Political Economy Macroeconomics, 26.02.2024.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Ghilardi, MF & Zilberman, R 2024, 'Macroeconomic Effects of Dividend Taxation with Investment Credit Limits', Journal of Political Economy Macroeconomics. https://doi.org/10.1086/730221

APA

Ghilardi, M. F., & Zilberman, R. (in press). Macroeconomic Effects of Dividend Taxation with Investment Credit Limits. Journal of Political Economy Macroeconomics. https://doi.org/10.1086/730221

Vancouver

Ghilardi MF, Zilberman R. Macroeconomic Effects of Dividend Taxation with Investment Credit Limits. Journal of Political Economy Macroeconomics. 2024 Feb 26. doi: 10.1086/730221

Author

Ghilardi, Matteo F. ; Zilberman, Roy. / Macroeconomic Effects of Dividend Taxation with Investment Credit Limits. In: Journal of Political Economy Macroeconomics. 2024.

Bibtex

@article{33acc2e314cc4bb4b057cc854e2df4e3,
title = "Macroeconomic Effects of Dividend Taxation with Investment Credit Limits",
abstract = "A dynamic general equilibrium model with an occasionally-binding investment borrowing limit reconciles competing views on the macroeconomic effects of dividend taxation. Specifically, permanent tax reforms are distortionary in the credit-constrained long-run equilibrium but are neutral otherwise. In the short- to medium-term, tax cuts produce muted, expansionary, or contractionary impacts depending on their scale, duration, and the firm's credit position. Interactions between dividend tax shocks and the financial constraint tightness generate state-contingent, non-linear, and asymmetrical macroeconomic dynamics. These findings help explain investment rate and asset price fluctuations observed following historical tax reforms. Finally, we explore the implications of dividend tax uncertainty.",
keywords = "Tax Reform, Occasionally-Binding Borrowing Constraint, Investment, Tobin's q, Business Activity",
author = "Ghilardi, {Matteo F.} and Roy Zilberman",
year = "2024",
month = feb,
day = "26",
doi = "10.1086/730221",
language = "English",
journal = "Journal of Political Economy Macroeconomics",
issn = "2832-9341",
publisher = "Chicago University Press",

}

RIS

TY - JOUR

T1 - Macroeconomic Effects of Dividend Taxation with Investment Credit Limits

AU - Ghilardi, Matteo F.

AU - Zilberman, Roy

PY - 2024/2/26

Y1 - 2024/2/26

N2 - A dynamic general equilibrium model with an occasionally-binding investment borrowing limit reconciles competing views on the macroeconomic effects of dividend taxation. Specifically, permanent tax reforms are distortionary in the credit-constrained long-run equilibrium but are neutral otherwise. In the short- to medium-term, tax cuts produce muted, expansionary, or contractionary impacts depending on their scale, duration, and the firm's credit position. Interactions between dividend tax shocks and the financial constraint tightness generate state-contingent, non-linear, and asymmetrical macroeconomic dynamics. These findings help explain investment rate and asset price fluctuations observed following historical tax reforms. Finally, we explore the implications of dividend tax uncertainty.

AB - A dynamic general equilibrium model with an occasionally-binding investment borrowing limit reconciles competing views on the macroeconomic effects of dividend taxation. Specifically, permanent tax reforms are distortionary in the credit-constrained long-run equilibrium but are neutral otherwise. In the short- to medium-term, tax cuts produce muted, expansionary, or contractionary impacts depending on their scale, duration, and the firm's credit position. Interactions between dividend tax shocks and the financial constraint tightness generate state-contingent, non-linear, and asymmetrical macroeconomic dynamics. These findings help explain investment rate and asset price fluctuations observed following historical tax reforms. Finally, we explore the implications of dividend tax uncertainty.

KW - Tax Reform

KW - Occasionally-Binding Borrowing Constraint

KW - Investment

KW - Tobin's q

KW - Business Activity

U2 - 10.1086/730221

DO - 10.1086/730221

M3 - Journal article

JO - Journal of Political Economy Macroeconomics

JF - Journal of Political Economy Macroeconomics

SN - 2832-9341

ER -