Investment Tax Credit in an Open Economy / Partha Sen, Stephen J. Turnovsky.

Format:

Book

Author/Creator:

Sen, Partha.

Contributor:

National Bureau of Economic Research.

Turnovsky, Stephen J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3298.

NBER working paper series no. w3298

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1990.

Summary:

This paper contrasts the effects of a permanent and temporary investment tax credit in an open economy. In both cases an ITC will initially stimulate investment, while reducing employment and output, and generating a current account deficit. If the ITC is permanent, the accumulation of capital leads to a higher equilibrium capital stock, higher employment and output, and a reduction in the economy's stock of net credit. If the ITC is temporary, after its removal, the economy eventually moves to a new steady-state equilibrium having a lower permanent capital stock and employment, together with a higher stock of net credit.

Notes:

Print version record

March 1990.