NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Tax Reforms and Investment: A Cross-Country Comparison

Jason G. Cummins, Kevin A. Hassett, R. Glenn Hubbard

NBER Working Paper No. 5232 (Also Reprint No. r2102)
Issued in December 1996
NBER Program(s):   CF   PE

We use firm-level panel data to explore the extent to which fixed investment responds to tax reforms in 14 OECD countries. Previous studies have often found that investment does not respond to changes in the marginal cost of investment. We identify some of the factors responsible for this finding and employ an estimation procedure that sidesteps the most important of them. In so doing, we find evidence of statistically and economically significant investment responses to tax changes in 12 of the 14 countries.

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Published: Journal of Public Economics, vol. 62, no. 1-2, pp. 237-273, (1996).

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