The Digest

Capital gains taxes imposed on corporations are increasing in importance; they interact with other distortions in important ways; and they deter firms from realizing gains, thus impeding the reallocation of assets to their most efficient owners. To mitigate the possibility of a third layer of taxation on corporate income, the U.S. tax code allows corporations a partial deduction for dividends received from other corporations; however, returns earned as capital gains...

Historically, the negative view of deflation may be attributed to the fact that deflation had been largely unanticipated. The negative view of deflation in the United States, no doubt, was reinforced by farmers who believed that the prices of the commodities they produced had fallen faster than the manufactured goods they consumed. In Good Versus Bad Deflation: Lessons from the Gold Standard Era (NBER Working Paper No. 10329), authors Michael Bordo, John Landon Lane,...