Di Corato, Luca
- Department of Economics, Swedish University of Agricultural Sciences
Report2014
Investment stimuli under government present-biased time preferences
Di Corato, Luca
Abstract
This paper examines the net benefit accruing to a present-biased government contemplating the option of speeding up investment using a tax cut or an investment subsidy as an incentive. The literature generally suggests the use of an investment subsidy rather than a tax cut. However, this study shows that, depending on the degree of present-biasedness, it may be more advantageous for the government to provide a tax cut.
Keywords
Investment; Tax reduction; Investment subsidy; Quasi-hyperbolic discounting; Real options;
Published in
Working Paper Series / Swedish University of Agricultural Sciences, Department of Economics
2014, number: 2014:03
Publisher: Swedish University of Agricultural Sciences, Department of Economics
SLU Authors
UKÄ Subject classification
Economics
Permanent link to this page (URI)
https://res.slu.se/id/publ/53736