ON THE EFFECTS OF INVESTMENT TAX CREDITS ON ECONOMIC-EFFICIENCY AND GROWTH

• 成果类型: Article
• 署名作者: PEREIRA, AM
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/0047-2727(94)90045-0
• 发表日期: 1994
• 页码: 437-461

摘要

This paper explores the overall efficiency effects of ITCs in the context of a disaggregated dynamic general equilibrium simulation model of the U.S. economy. This model postulates forward-looking investment decisions, and allows for optimal government borrowing and financial crowding out. Simulation results confirm the conventional wisdom that ITCs are distortionary, but challenge the equally conventional wisdom that ITCs necessarily spur investment and GDP. In addition, results point to an important policy trade-off. Introducing ITCs without neutralizing their budgetary effects would lead to low efficiency losses but would reduce investment and GDP due to financial crowding out. In turn, imposition of ITCs while blocking their budgetary effects would lead to relatively large efficiency losses while minimizing the negative impact on investment and GDP.