Firm Heterogeneity and the Long-run Effects of Dividend Tax Reform / Francois Gourio, Jianjun Miao.

Format:

Book

Author/Creator:

Gourio, Francois.

Contributor:

National Bureau of Economic Research.

Miao, Jianjun.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15044.

NBER working paper series no. w15044

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2009.

Summary:

To study the long-run effect of dividend taxation on aggregate capital accumulation, we build a dynamic general equilibrium model in which there is a continuum of firms subject to idiosyncratic productivity shocks. We find that a dividend tax cut raises aggregate productivity by reducing the frictions in the reallocation of capital across firms. Our baseline model simulations show that when both dividend and capital gains tax rates are cut from 25 and 20 percent, respectively, to the same 15 percent level permanently, the aggregate long-run capital stock increases by about 4 percent.

Notes:

Print version record

June 2009.