Replication data for: Tax Policy and Heterogeneous Investment Behavior

Name: Replication data for: Tax Policy and Heterogeneous Investment Behavior
Published: 2017-01-01
License: This work is licensed under an Other license created by the data depositor. Please refer to the LICENSE file, which should be located alongside the project data and documentation.
Keywords: Natural Experiment

Principal Investigator(s): View help for Principal Investigator(s) Eric Zwick; James Mahon

Version: View help for Version V1

Name	File Type	Size	Last Modified
20140855_code			10/26/2021 01:10:PM
LICENSE.txt	text/plain	14.6 KB	12/06/2019 12:15:PM

Project Citation:

Zwick, Eric, and Mahon, James. Replication data for: Tax Policy and Heterogeneous Investment Behavior. Nashville, TN: American Economic Association [publisher], 2017. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-06. https://doi.org/10.3886/E116159V1

Project Description

Summary: We estimate the effect of temporary tax incentives on equipment investment using shifts in accelerated depreciation. Analyzing data for over 120,000 firms, we present three findings. First, bonus depreciation raised investment in eligible capital relative to ineligible capital by 10.4 percent between 2001 and 2004 and 16.9 percent between 2008 and 2010. Second, small firms respond 95 percent more than big firms. Third, firms respond strongly when the policy generates immediate cash flows, but not when cash flows only come in the future. This heterogeneity materially affects investment-weighted estimates and supports models in which financial frictions or fixed costs amplify investment responses.

Scope of Project

Subject Terms: Natural Experiment

JEL Classification:
      D21 Firm Behavior: Theory
      D22 Firm Behavior: Empirical Analysis
      D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
      G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      H32 Fiscal Policies and Behavior of Economic Agents: Firm

Geographic Coverage: United States

Time Period(s): 1993 – 2010

Universe: All firms in the United States

Data Type(s): administrative records data

Methodology

Data Source: United States IRS Statistics of Income Administrative Data, 1993-2010

Unit(s) of Observation: Firms,

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V1 [2019-12-06]

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