Monte-Carlo Simulations Revised: A Reply to Arqus

Arbeitspapier

This contribution revises Monte-Carlo based simulation techniques as used in BusinessTaxation and Accounting literature, most prominently proposed by fellows ofTherefore, we focus on a methodically orientated discussion. Our results suggestthe standard approach leads to biased estimates of expected discounted tax paymentsassuming cash flow uncertainty and incomplete loss-offset regulations. We built upcritique by giving an analytical expression for expected discounted tax paymentsformulating the structure of probability weighted tax states in the future conditionalcash flows above or be-low zero. Consequently, this enables us to evaluate the resultsobtained from the standard Monte-Carlo approach within a numerical analysis.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ifo Working Paper ; No. 73

Classification and Topics

• Classification: Wirtschaft ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Law
• Subject: Arqus ; cash flow uncertainty ; limited loss-offset ; Monte-Carlo simulations

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dorn, Sabrina
• Event: Veröffentlichung
• (who): ifo Institute - Leibniz Institute for Economic Research at the University of Munich
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/73752
• Last update: 10.03.2025, 11:45 AM CET