Dividend Taxation and Financial Business Cycles

Ghilardi, Matteo F. and Zilberman, Roy (2024) Dividend Taxation and Financial Business Cycles. Economics Letters, 238: 111709. ISSN 0165-1765

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Abstract

We examine the interactions between different dividend tax systems and financial shocks in a dynamic stochastic general equilibrium (DSGE) model with an occasionally-binding investment credit limit. We show that dividend taxes largely determine the collateral value of assets, thereby occasionally distorting investment decisions and altering the propagation of financial shocks. Permanently lower dividend taxes dampen financially-driven business cycles in a state-contingent fashion. They also help explain substantial macroeconomic asymmetries following equally-sized expansionary and contractionary financial shocks.

Item Type:

Journal Article

Journal or Publication Title:

Economics Letters

Uncontrolled Keywords:

Research Output Funding/no_not_funded

Subjects:

?? occasionally-binding borrowing constraintsinvestmentasset pricesfinancial shocksno - not fundednoeconomics, econometrics and finance(all)financeeconomics and econometricse22e32e44h25h30 ??

Departments:

Lancaster University Management School > Economics

ID Code:

218169

Deposited By:

ep_importer_pure

Deposited On:

16 Apr 2024 10:00

Refereed?:

Yes

Published?:

Published

Last Modified:

28 Apr 2024 23:58

URI:

https://eprints.lancs.ac.uk/id/eprint/218169