Front Matter Page
Fiscal Affairs Department
Contents
I. Introduction
II. Model
A. Firm
B. Household
C. Government
D. Competitive Equilibrium
E. Ricardian Equivalence with Corporate Taxation
III. Departure from the Ricardian Result
A. Financing Frictions
B. Financial Frictions and Corporate Taxation
C. Firm’s Financial Policy
D. Firm’s Investment Policy
E. Other Agents’ Problems
IV. Model Solution
A. Steady State Properties
B. Parameterization and Numerical Algorithm
V. Effects of Temporary Tax Cuts
A. Policy Experiments
B. Transitional Dynamics After Tax Cuts
C. Sensitivity analysis
VI. Conclusion
References
Appendices
A. Proofs
A.1. Ricardian equivalence result with Corporate Taxation
A.2. Proof of lemma 1
A.3. Proof of proposition 4
A.4. Proof of Proposition 5
A.5. Proof of Proposition 6
A.6. Proof of Lemma 2
A.7. Proof of Proposition 7
A.8. Proof of Proposition 8
A.9. Proof of lemma 3
B. Numerical Algorithm
Tables
1. Baseline Parameterization
2. Description of Experiments
Figures
1. Laffer Curve
2. Illustration of Tax Policy Experiment (lump-sum tax)
3. Transitional Dynamics without Financing Frictions
4. Transitional Dynamics with Financing Frictions
5. Sensitivity analysis