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Macroeconomic Effects of Dividend Taxation with Investment Credit Limits

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Macroeconomic Effects of Dividend Taxation with Investment Credit Limits. / Ghilardi, Matteo F.; Zilberman, Roy.
In: Journal of Political Economy Macroeconomics, Vol. 2, No. 3, 30.09.2024, p. 409-448.

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, vol. 2, no. 3, pp. 409-448. https://doi.org/10.1086/730221

APA

Ghilardi, M. F., & Zilberman, R. (2024). Macroeconomic Effects of Dividend Taxation with Investment Credit Limits. Journal of Political Economy Macroeconomics, 2(3), 409-448. 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 Sept 30;2(3):409-448. Epub 2024 Jul 25. 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 ; Vol. 2, No. 3. pp. 409-448.

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, their duration, and the firm's credit position. Interactions between dividend tax shocks and the financial constraint tightness generate state-contingent, nonlinear, 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 = sep,
day = "30",
doi = "10.1086/730221",
language = "English",
volume = "2",
pages = "409--448",
journal = "Journal of Political Economy Macroeconomics",
issn = "2832-9341",
publisher = "Chicago University Press",
number = "3",

}

RIS

TY - JOUR

T1 - Macroeconomic Effects of Dividend Taxation with Investment Credit Limits

AU - Ghilardi, Matteo F.

AU - Zilberman, Roy

PY - 2024/9/30

Y1 - 2024/9/30

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, their duration, and the firm's credit position. Interactions between dividend tax shocks and the financial constraint tightness generate state-contingent, nonlinear, 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, their duration, and the firm's credit position. Interactions between dividend tax shocks and the financial constraint tightness generate state-contingent, nonlinear, 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

VL - 2

SP - 409

EP - 448

JO - Journal of Political Economy Macroeconomics

JF - Journal of Political Economy Macroeconomics

SN - 2832-9341

IS - 3

ER -