TY  - JOUR
AU  - Abel,Andrew B.
TI  - Accelerated Depreciation and the Efficacy of Temporary Fiscal Policy: Implications for an Inflationary Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 596
PY  - 1983
Y2  - February 1983
UR  - http://www.nber.org/papers/w0596
L1  - http://www.nber.org/papers/w0596.pdf
N1  - Author contact info:
Andrew B. Abel
Wharton School
University of Pennsylvania
2315 Steinberg Hall - Dietrich Hall
Philadelphia, PA  19104-6367
Tel: 215/898-4801
Fax: 215/573-7244
E-Mail: abel@wharton.upenn.edu
AB  - The effect on investment of temporary tax rate changes depends on the age profile of depreciation deduct ions. If the depreciation allowance schedule is accelerated, then temporary cuts in the corporate tax rate could reduce investment. Inflation causes the age profile of real depreciation deductions to become accelerated and thus could make temporary tax cuts have a contractionary effect on investment. Two currently proposed reforms are shown to exacerbate this effect. Under these proposals, temporary tax cuts are likely to have opposite effects on investment in short-lived and long-lived capital, thereby complicating the conduct of countercyclical fiscal policy.
ER  -