Abstract:
The distinction between production and purchases of investment go ods is essential for quantifying the response to changes in investment tax incentives. If investment goods are tradeable, a large fraction of the dema nd from changes in tax subsidies will be met from abroad. This difference b etween production and purchases implies that investment tax incentives will lead to more capital accumulation, but less stimulus to economic activity relative to a no-trade counterfactual. Domestic capacity to produce investm ent goods is less than perfectly elastic because of quasi-fixed factors of production, adjustment costs, and specialization of labor. This paper build s these features into a DGSE model where key parameters are estimated to ma tch the reduced-form response of investment production and purchases to tax incentives. Typical investment tax policies result in equipment purchases that are split roughly half between domestic and foreign production of equi pment.
DTSTAMP:20260422T113145Z DTSTART:20170512T130000Z DTEND:20170512T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR