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Filippo Occhino
Investment Expensing without Tax Credits or Interest Deductibility: A Macroeconomic Evaluation FALL25-07, November 2025
The marginal effective tax rate (METR), a measure of how taxation affects investment returns, varies significantly across asset types (e.g., structures versus equipment) and financing methods (debt versus equity). This variation distorts capital allocation. A tax reform that allows immediate expensing of
investment while eliminating interest deductibility and investment tax credits would equalize METRs across investments, promoting a more efficient allocation of capital. This paper evaluates the macroeconomic effects of such a reform using a dynamic general equilibrium model that incorporates heterogeneous
capital types, debt and equity financing, interest deductibility, and accelerated depreciation. The results show that the reform boosts investment and output. It leads to short-term fiscal deficits and an initial increase in government debt, followed by long-run surpluses and debt reduction. R&D investment
COLES WORKING PAPER SERIES
The effects of the tax reform are evaluated using a dynamic general equilibrium model. The tax reform equalizes the marginal effective tax rates across investments. Investment and output increase by 8 percent and 0.5 percent, respectively, on impact. Government debt rises by 10 percent after 15 years but declines in the long run. The R&D capital stock decreases by 6 percent in the long run.
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Hyunju Shin
The Role of CEO-TMT Generational Alignment in Driving Firm Innovation
Faculty often share their ongoing, unpublished research - called working papers - with one another to promote discussion and explore collaboration opportunities. The Coles College Working Paper Series collects faculty working papers to highlight emerging research and foster a dialogue between peers.
FALL25-04, November 2025
This how generational similarity among top management team (TMT) members influences firm innovation. Drawing on generational identity theory, we propose and empirically test the idea that firms are more likely to innovate when their CEOs and non- CEO executives belong to similar generational cohorts. Using panel data from 1,906 S&P-listed firms between 2002 and 2017, we find that generation similarity positively study investigates
impacts innovation performance, primarily by enhancing managerial ability. This effect is moderated by CEO power, firm-level investment in employee relations, and whether the firm operates in a high-tech industry. Our findings extend upper echelons and strategic leadership theories by identifying generation as a meaningful and under-explored TMT characteristic. While prior research often focuses on age or demographic diversity, we show that
generational alignment—reflecting shared formative experiences and value systems—plays a critical role in shaping strategic decisions. Importantly, the innovation benefits of generational similarity are context- dependent, highlighting the need for firms to consider both team composition and organizational environment. As firms face increasing generational diversity in leadership, our study offers timely insights into building more cohesive and
TMTs with similar generations drive stronger innovation performance. Generation similarity boosts innovation by increasing managerial ability. CEO power can weaken, while employee focus strengthens, innovation effects. Generationally aligned TMTs thrive most in high-tech industry contexts.
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