EXECUTIVE TAKEAWAYS
■ The effect of business tax cuts is studied using a dynamic general equilibrium model. ■ A 10 percentage point cut in the tax rate raises output by 0.4 percent on impact. ■ The predicted effect would be larger without debt financing and accelerated depreciation. ■ The cumulative tax rate multiplier is -0.4 on impact and -0.6 after ten years. ■ Impact multipliers of depreciation allowances and tax credits are -0.1 and -0.7
Filippo Occhino, Associate Professor of Economics
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