Home > Publications . Search All . Browse All . Country . Browse PSC Pubs . PSC Report Series

PSC In The News

RSS Feed icon

Thompson says criminal justice policies led to creation of prison gangs like Aryan Brotherhood

Schmitz finds job loss before retirement age contributes to weight gain, especially in men

Kimball says Fed should get comfortable with "backtracking"

Highlights

Overview of Michigan's advanced research computing resources, Monday, June 27, 9-10:30 am, BSRB - Kahn Auditorium

U-M's Data Science Initiative offers expanded consulting services via CSCAR

Elizabeth Bruch promoted to Associate Professor

Susan Murphy elected to the National Academy of Sciences

Next Brown Bag

PSC Brown Bags
will resume fall 2016

Temporary investment tax incentives: Theory with evidence from bonus depreciation

Publication Abstract

House, C.L., and Matthew D. Shapiro. 2008. "Temporary investment tax incentives: Theory with evidence from bonus depreciation." American Economic Review, 98(3): 737-768.

The intertemporal elasticity of investment for long-lived capital goods is nearly infinite. Consequently, investment prices should fully reflect temporary tax subsidies, regardless of the investment supply elasticity. Since prices move one for-one with the subsidy, elasticities can be inferred from quantities alone. This paper uses a recent tax policy-bonus depreciation-to estimate the investment supply elasticity. Investment in qualified capital increased sharply. The estimated elasticity is high-between 6 and 14. There is no evidence that market prices reacted to the subsidy, suggesting that adjustment costs are internal, or that measurement error masks the price changes.

DOI:10.1257/aer.98.3.737 (Full Text)

Browse | Search : All Pubs | Next