DSpace Repository

Taxation, user cost of capital and investment behaviour of New Zealand firms

Show simple item record

dc.contributor.author Nolan, Gulnara
dc.contributor.author Nolan, Matt
dc.date.accessioned 2021-06-08T01:47:59Z
dc.date.accessioned 2022-07-12T02:55:33Z
dc.date.available 2021-06-08T01:47:59Z
dc.date.available 2022-07-12T02:55:33Z
dc.date.copyright 2021
dc.date.issued 2021
dc.identifier.uri https://ir.wgtn.ac.nz/handle/123456789/21108
dc.description.abstract This paper investigates the relationship between the user cost of capital (UCC) and the investment behaviour of New Zealand firms both in the short and long run. The key goal is to understand how policy changes that influence this cost of capital translate into changes in productive investment in New Zealand. Previous analysis on the UCC investment relationship in New Zealand focused on short term impacts on overall investment, and implied there was a limited investment response among capital heavy manufacturing firms. This was at odds with results from other countries (e.g. Belgium, France, Germany, UK). Our paper extends the New Zealand analysis in two ways: it re-estimates the prior results based on additional data and improved specification tests, and it also estimates an error-correction model that more consistently estimates the long-term impact of UCC changes on the capital stock. Our short-run findings are relatively consistent with prior New Zealand research. However, the long-run response of investment with respect to UCC changes (an elasticity of -1.4) is much larger than that implied in the prior research and previous estimates from macrodata. Furthermore, manufacturing firms also appeared to change their capital stock sizably from these estimates. The large response from our error correction estimates imply that the non-linearity of the dynamics of any investment response (e.g. due to lumpiness) needs to be accounted for when considering the long run consequences of any policy changes that affect the user cost of capital. en_NZ
dc.format pdf en_NZ
dc.language.iso en_NZ
dc.publisher Te Herenga Waka—Victoria University of Wellington en_NZ
dc.relation.ispartofseries Working Papers in Public Finance ; 01/2021 en_NZ
dc.subject User cost of capital en_NZ
dc.subject Taxation en_NZ
dc.subject Investment en_NZ
dc.subject New Zealand en_NZ
dc.title Taxation, user cost of capital and investment behaviour of New Zealand firms en_NZ
dc.type Text en_NZ
vuwschema.contributor.unit School of Accounting and Commercial Law en_NZ
vuwschema.subject.anzsrcfor 140104 Microeconomic Theory en_NZ
vuwschema.type.vuw Working or Occasional Paper en_NZ
vuwschema.subject.anzsrcforV2 380304 Microeconomic theory en_NZ
dc.rights.rightsholder www.victoria.ac.nz/sacl/about/cpf en_NZ

Files in this item

This item appears in the following Collection(s)

Show simple item record

Search DSpace


My Account