TY  - JOUR
AU  - Auerbach,Alan J.
AU  - Hassett,Kevin
TI  - Recent U.S. Investment Behavior and the Tax Reform Act of 1986: A Disaggregate View
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3626
PY  - 1992
Y2  - June 1992
UR  - http://www.nber.org/papers/w3626
L1  - http://www.nber.org/papers/w3626.pdf
N1  - Author contact info:
Alan J. Auerbach
Department of Economics
508-1 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu

Kevin Hassett
American Enterprise Institute
1150 Seventeenth Street, N.W.
Washington, DC 20036
E-Mail: khassett@aei.org
M2  - featured in NBER digest on 1991-05-01
AB  - The Tax Reform Act of 1986 was expected to cause an overall decline in business fixed investment and a shift in the composition of investment away from machinery and equipment, which previously had received an investment tax credit. Yet neither investment relative to GNP nor equipment investment relative to total investment declined during the period 1987-89. This paper's analysis of investment at the level of individual industries and assets helps reconcile the recent pattern of investment and the predicted effects of the Tax Reform Act. We find that the trend toward investment in equipment predated the Act, and that recent investment in equipment has fallen short of what would have been expected on the basis on nontax factors alone. Using a new technique to identify the impact of taxation on investment, we confirm the importance of tax policy using the cross-section pattern of equipment investment since 1986.
ER  -