Replication data for: Tax Policy and Heterogeneous Investment Behavior
Principal Investigator(s): View help for Principal Investigator(s) Eric Zwick; James Mahon
Version: View help for Version V1
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Project Citation:
Zwick, Eric, and Mahon, James. Replication data for: Tax Policy and Heterogeneous Investment Behavior. Nashville, TN: American Economic Association [publisher], 2017. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-06. https://doi.org/10.3886/E116159V1
Project Description
Summary:
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We estimate the effect of temporary tax incentives on equipment investment using shifts in accelerated depreciation. Analyzing data for over 120,000 firms, we present three findings. First, bonus depreciation raised investment in eligible capital relative to ineligible capital by 10.4 percent between 2001 and 2004 and 16.9 percent between 2008 and 2010. Second, small firms respond 95 percent more than big firms. Third, firms respond strongly when the policy generates immediate cash flows, but not when cash flows only come in the future. This heterogeneity materially affects investment-weighted estimates and supports models in which financial frictions or fixed costs amplify investment responses.
Scope of Project
Subject Terms:
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Natural Experiment
JEL Classification:
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D21 Firm Behavior: Theory
D22 Firm Behavior: Empirical Analysis
D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
H25 Business Taxes and Subsidies including sales and value-added (VAT)
H32 Fiscal Policies and Behavior of Economic Agents: Firm
D21 Firm Behavior: Theory
D22 Firm Behavior: Empirical Analysis
D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
H25 Business Taxes and Subsidies including sales and value-added (VAT)
H32 Fiscal Policies and Behavior of Economic Agents: Firm
Geographic Coverage:
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United States
Time Period(s):
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1993 – 2010
Universe:
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All firms in the United States
Data Type(s):
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administrative records data
Methodology
Data Source:
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United States IRS Statistics of Income Administrative Data, 1993-2010
Unit(s) of Observation:
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Firms,
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