Quantifying Optimal Growth Policy
BP2-STS
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01.06.2010
32
English
The optimal mix of growth policies is determined within a comprehensive endogenous growth model. The analysis captures important elements of the tax-transfer system and accounts for transitional dynamics. Currently, for calculating corporate taxable income US firms are allowed to deduct approximately all oft heircapital and R&D costs from sales revenue. Our analysis suggests that this policy leads to severe underinvestment in both R&D and physical capital. We find that firms should be allowed to deduct between 2-2.5 times their R&D costs and about 1.5-1.7 times their capital costs. Implementing the optimal policy mix is likely to entail huge welfare gains.
- Collections
- Faculty
- Faculté des sciences économiques et sociales et du management
- Language
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- English
- Classification
- Economics
- Series statement
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- Working Papers SES ; 414
- License
- License undefined
- Identifiers
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- RERO DOC 27892
- RERO R007003949
- Persistent URL
- https://folia.unifr.ch/unifr/documents/302110
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