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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LICENSE.txt text/plain 14.6 KB 12/06/2019 12:15:PM

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:  View help for Summary 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:  View help for Subject Terms Natural Experiment
JEL Classification:  View help for JEL Classification
      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:  View help for Geographic Coverage United States
Time Period(s):  View help for Time Period(s) 1993 – 2010
Universe:  View help for Universe All firms in the United States
Data Type(s):  View help for Data Type(s) administrative records data

Methodology

Data Source:  View help for Data Source United States IRS Statistics of Income Administrative Data, 1993-2010
Unit(s) of Observation:  View help for Unit(s) of Observation Firms,

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V1 [2019-12-06]

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