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American Economic Journal: Macroeconomics: Vol. 2 No. 1 (January 2010)
AEJ: Macro Volume. 2, Issue 1 | 
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AEJ: Macro Forthcoming Articles
Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform
Article Citation
Gourio, François, and
Jianjun Miao. 2010. "Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform."
American Economic Journal: Macroeconomics,
2(1): 131-68.
DOI: 10.1257/mac.2.1.131
DOI: 10.1257/mac.2.1.131
Abstract
To study the long-run effect of dividend taxation on aggregate capital
accumulation, we build a dynamic general equilibrium model in which there is a continuum of firms subject to idiosyncratic productivity
shocks. We find that a dividend tax cut raises aggregate productivity by reducing the frictions in the reallocation of capital across firms. Our baseline model simulations show that when both dividend and capital gains tax rates are cut from 25 and 20 percent, respectively, to the same 15 percent level permanently, the aggregate long-run capital stock increases by about 4 percent. (JEL D21, E22, E62, G32, G35, H25, H32)
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Authors
Gourio, François (Boston U)
Miao, Jianjun (Boston U and Zhongnan U Economics and Law)
Miao, Jianjun (Boston U and Zhongnan U Economics and Law)
JEL Classifications
D21: Firm Behavior: Theory
E22: Capital; Investment; Capacity
E62: Fiscal Policy
G32: Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
G35: Payout Policy
H25: Business Taxes and Subsidies including sales and value-added (VAT)
H32: Fiscal Policies and Behavior of Economic Agents: Firm
E22: Capital; Investment; Capacity
E62: Fiscal Policy
G32: Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
G35: Payout Policy
H25: Business Taxes and Subsidies including sales and value-added (VAT)
H32: Fiscal Policies and Behavior of Economic Agents: Firm
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