Tax elasticity estimates for capital stocks Jean-François Wen and Fatih Yılmaz
By: Wen, Jean François
.
Contributor(s): Yilmaz, Fatih.
Material type: 
ArticlePublisher: 2020Subject(s): ELASTICIDAD | CAPITAL-RIESGO
In:
FinanzArchiv volume 76, september 2020, p. 215-239Summary: We use panel cointegration techniques to estimate the long-run, tax-adjusted, user cost elasticity of capital (UCE) in a small open economy. The estimates exploit three sources of variation in Canadian tax policy: across provinces, industries, and years. The UCE is estimated to be between -1.1 and -1.3 for machinery and equipment. We also provide semielasticities of capital with respect to marginal effective tax rates (METR). Our construction of the user costs makes use of a detailed data set on federal and provincial tax policy variables.
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Bibliografía
We use panel cointegration techniques to estimate the long-run, tax-adjusted, user cost elasticity of capital (UCE) in a small open economy. The estimates exploit three sources of variation in Canadian tax policy: across provinces, industries, and years. The UCE is estimated to be between -1.1 and -1.3 for machinery and equipment. We also provide semielasticities of capital with respect to marginal effective tax rates (METR). Our construction of the user costs makes use of a detailed data set on federal and provincial tax policy variables.
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