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

PSC In The News

RSS Feed icon

Murphy says mobile sensor data will allow adaptive interventions for maximizing healthy outcomes

Frey comments on why sunbelt metro area economies are still struggling

Krause says having religious friends leads to gratitude, which is associated with better health

Highlights

PSC Fall 2014 Newsletter now available

Martha Bailey and Nicolas Duquette win Cole Prize for article on War on Poverty

Michigan's graduate sociology program tied for 4th with Stanford in USN&WR rankings

Jeff Morenoff makes Reuters' Highly Cited Researchers list for 2014

Next Brown Bag

Monday, Nov 3
Melvin Stephens

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