In this paper, we summarize recent advances in the study of effects of tax policy on the fixed investment decisions of firms. We attempt to identify consensus where it has been achieved and to highlight important unresolved issues. In addition, we discuss the implications of recent findings for the analysis of policy options, and discuss arguments for and against long-run tax policy that favors business investment spending.

Kevin A. Hassett
Stop 80
Board of Governors of the Federal Reserve System
Washington, DC 20551
(202)452-2669
m1kah@frb.gov

R. Glenn Hubbard
Graduate School of Business
Columbia University
609 Uris Hall
New York, NY 10027
(212)854-6084
ghubbard@research.gsb.columbia.edu

[Home]