Sabine Böckem
Investment and Politics – Does Tax Fear Delay Investment?
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- 10.1628/0015221022905731
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Rumors about tax rate changes usually lead to moaning lobbyists and firm representatives publicly forecasting that investment within their industry will be doomed to death for the coming years. It is the aim of this paper to analyze whether the threat of imposing a sales tax can lead to a systematic delay of investment. In a dynamic investment model with demand and tax uncertainty we show that no systematic delay of investment will occur.