Optimal Investment Strategies Under Demand and Tax Policy Uncertainity
21 Pages Posted: 21 Mar 2001
Date Written: July 2000
Abstract
In this paper we offer an analysis of the effects of uncertainty about future tax policy on irreversible investment. The main message of the paper is that investment is not much affected by the degreee of tax policy uncertainty. This is true regardless of whether random tax changes are determined endogenously or exogenously. The paper therefore indicates that reducing tax policy uncertainty is probably no magic bullet to increase private investment spending.
JEL Classification: D81, E22, H25
Suggested Citation: Suggested Citation
Böhm, Hjalmar and Funke, Michael, Optimal Investment Strategies Under Demand and Tax Policy Uncertainity (July 2000). Available at SSRN: https://ssrn.com/abstract=263519 or http://dx.doi.org/10.2139/ssrn.263519
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