The Debt Tax Shield, Economic Growth and Inequality

Research output: Contribution to conferencePaperResearchpeer-review

2 Downloads (Pure)

Abstract

We study the general-equilibrium implications of the corporate debt tax shield in a growth economy that taxes household income and firm profits and redistributes tax revenues in anattempt to harmonize the lifetime consumption opportunities among households that differ in their endowments. Our model shows that in general equilibrium the tax shield’s reduction in the corporate after-tax borrowing rate is counteracted by an increase in the pre-tax rate. Our model further predicts the debt tax shield to lead to a higher growth rate of the economy and an increase in the degree of disparity in households’ lifetime consumption opportunities.
Original languageEnglish
Publication date2019
Number of pages48
Publication statusPublished - 2019
EventEuropean Financial Management Association 2019 Annual Meetings - University of Azores, Ponta Delgada, Island of S. Miguel, Portugal
Duration: 26 Jun 201929 Jun 2019
Conference number: 28
https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2019-Azores/2019%20meetings.php

Conference

ConferenceEuropean Financial Management Association 2019 Annual Meetings
Number28
LocationUniversity of Azores
CountryPortugal
CityPonta Delgada, Island of S. Miguel
Period26/06/201929/06/2019
Internet address

Keywords

  • Debt tax shield
  • Macroeconomic growth
  • Redistributive tax system

Cite this

Fischer, M., & Jensen, B. A. (2019). The Debt Tax Shield, Economic Growth and Inequality. Paper presented at European Financial Management Association 2019 Annual Meetings, Ponta Delgada, Island of S. Miguel, Portugal.
Fischer, Marcel ; Jensen, Bjarne Astrup. / The Debt Tax Shield, Economic Growth and Inequality. Paper presented at European Financial Management Association 2019 Annual Meetings, Ponta Delgada, Island of S. Miguel, Portugal.48 p.
@conference{e971149b3b4a4416bc53fbda75429da9,
title = "The Debt Tax Shield, Economic Growth and Inequality",
abstract = "We study the general-equilibrium implications of the corporate debt tax shield in a growth economy that taxes household income and firm profits and redistributes tax revenues in anattempt to harmonize the lifetime consumption opportunities among households that differ in their endowments. Our model shows that in general equilibrium the tax shield’s reduction in the corporate after-tax borrowing rate is counteracted by an increase in the pre-tax rate. Our model further predicts the debt tax shield to lead to a higher growth rate of the economy and an increase in the degree of disparity in households’ lifetime consumption opportunities.",
keywords = "Debt tax shield, Macroeconomic growth, Redistributive tax system, Debt tax shield, Macroeconomic growth, Redistributive tax system",
author = "Marcel Fischer and Jensen, {Bjarne Astrup}",
year = "2019",
language = "English",
note = "null ; Conference date: 26-06-2019 Through 29-06-2019",
url = "https://www.efmaefm.org/0EFMAMEETINGS/EFMA{\%}20ANNUAL{\%}20MEETINGS/2019-Azores/2019{\%}20meetings.php",

}

Fischer, M & Jensen, BA 2019, 'The Debt Tax Shield, Economic Growth and Inequality' Paper presented at, Ponta Delgada, Island of S. Miguel, Portugal, 26/06/2019 - 29/06/2019, .

The Debt Tax Shield, Economic Growth and Inequality. / Fischer, Marcel; Jensen, Bjarne Astrup.

2019. Paper presented at European Financial Management Association 2019 Annual Meetings, Ponta Delgada, Island of S. Miguel, Portugal.

Research output: Contribution to conferencePaperResearchpeer-review

TY - CONF

T1 - The Debt Tax Shield, Economic Growth and Inequality

AU - Fischer, Marcel

AU - Jensen, Bjarne Astrup

PY - 2019

Y1 - 2019

N2 - We study the general-equilibrium implications of the corporate debt tax shield in a growth economy that taxes household income and firm profits and redistributes tax revenues in anattempt to harmonize the lifetime consumption opportunities among households that differ in their endowments. Our model shows that in general equilibrium the tax shield’s reduction in the corporate after-tax borrowing rate is counteracted by an increase in the pre-tax rate. Our model further predicts the debt tax shield to lead to a higher growth rate of the economy and an increase in the degree of disparity in households’ lifetime consumption opportunities.

AB - We study the general-equilibrium implications of the corporate debt tax shield in a growth economy that taxes household income and firm profits and redistributes tax revenues in anattempt to harmonize the lifetime consumption opportunities among households that differ in their endowments. Our model shows that in general equilibrium the tax shield’s reduction in the corporate after-tax borrowing rate is counteracted by an increase in the pre-tax rate. Our model further predicts the debt tax shield to lead to a higher growth rate of the economy and an increase in the degree of disparity in households’ lifetime consumption opportunities.

KW - Debt tax shield

KW - Macroeconomic growth

KW - Redistributive tax system

KW - Debt tax shield

KW - Macroeconomic growth

KW - Redistributive tax system

M3 - Paper

ER -

Fischer M, Jensen BA. The Debt Tax Shield, Economic Growth and Inequality. 2019. Paper presented at European Financial Management Association 2019 Annual Meetings, Ponta Delgada, Island of S. Miguel, Portugal.