Arbeitspapier
Investment tax incentives and their big time-to-build fiscal multiplier
This paper studies how investment tax incentives stimulate output in a medium-scale DSGE model, which allows for a variety of fiscal financing mechanisms. We find that the horizon following a positive shock in investment tax incentives is crucial. The shock is highly expansionary in the long run, with the relevant fiscal multiplier substantially exceeding 1, but this effect only becomes visible after two to three years. Our analysis indicates that a rise in the marginal product of labor and the demand for labor trigger this expansion, which is an effect that partial equilibrium studies ignore. Our analysis also contributes to the time-to-build profile of the fiscal multiplier. The results suggest that investment tax incentives are even more effective when nominal wages adjust faster.
- Language
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Englisch
- Bibliographic citation
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Series: UCD Centre for Economic Research Working Paper Series ; No. WP19/27
- Classification
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Wirtschaft
Business Fluctuations; Cycles
Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Fiscal Policy
- Subject
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private investment incentives
investment tax credit
fiscal multiplier
- Event
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Geistige Schöpfung
- (who)
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Bermperoglou, Dimitrios
Deli, Yota
Kalyvitis, Sarantis
- Event
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Veröffentlichung
- (who)
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University College Dublin, UCD Centre for Economic Research
- (where)
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Dublin
- (when)
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2019
- Handle
- Last update
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10.03.2025, 11:41 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Bermperoglou, Dimitrios
- Deli, Yota
- Kalyvitis, Sarantis
- University College Dublin, UCD Centre for Economic Research
Time of origin
- 2019
Other Objects (12)
Investment tax incentives and their big time-to-build fiscal multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Meta-analysis: Fiscal multiplier
Biases in fiscal multiplier estimates
Biases in fiscal multiplier estimates
Biases in fiscal multiplier estimates
The fiscal multiplier: positive or negative?
Parameter Uncertainty and the Fiscal Multiplier
Financial Fragility and the Fiscal Multiplier
Natural Disasters, Government Spending, and the Fiscal Multiplier
Regional Consumption Responses and the Aggregate Fiscal Multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Meta-analysis: Fiscal multiplier
Biases in fiscal multiplier estimates
Biases in fiscal multiplier estimates
Biases in fiscal multiplier estimates
The fiscal multiplier: positive or negative?
Parameter Uncertainty and the Fiscal Multiplier
Financial Fragility and the Fiscal Multiplier
Natural Disasters, Government Spending, and the Fiscal Multiplier
Regional Consumption Responses and the Aggregate Fiscal Multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Investment tax incentives and their big time-to-build fiscal multiplier
Meta-analysis: Fiscal multiplier
Biases in fiscal multiplier estimates
Biases in fiscal multiplier estimates
Biases in fiscal multiplier estimates
The fiscal multiplier: positive or negative?
Parameter Uncertainty and the Fiscal Multiplier
Financial Fragility and the Fiscal Multiplier
Natural Disasters, Government Spending, and the Fiscal Multiplier