TY  - JOUR
AU  - Sen,Partha
AU  - Turnovsky,Stephen J.
TI  - Investment Tax Credit in an Open Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3298
PY  - 1991
Y2  - February 1991
UR  - http://www.nber.org/papers/w3298
L1  - http://www.nber.org/papers/w3298.pdf
N1  - Author contact info:
Stephen Turnovsky
Department of Economics
301 Savery Hall; Mail Stop DK 30
University of Washington
Seattle, WA   98195
Tel: 206-545-8028
E-Mail: sturn@u.washington.edu
AB  - 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.
ER  -