The Effect of Taxes on Growth Investments: A Note

Authors

  • Clovis De Faro Getulio Vargas Foundation, Rio de Janeiro, Brazil image/svg+xml

Keywords:

growth investments, taxation, optimal rotation, reinvestment, inflation

Abstract

The standard text-book presentation of growth investments does not include the treatment of taxation, an issue that was first addressed by Brenner and Venezia (1983). While their analysis can be considered complete for the no-reinvestment case, their conclusion for the reinvestment case is somewhat misleading as the effect of taxes was not separated from that of inflation. The present note explicitly shows that the introduction of taxation has no effect on the optimal rotation.

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References

Allen, R. G. D. (1938). Mathematical analysis for economists. St. Martin's Press.

Baumol, W. J. (1972). Economic theory and operations analysis (3.ª ed.). Prentice-Hall.

Bierman, H., Jr., & Smidt, S. (1993). The capital budgeting decision (8.ª ed.). Macmillan.

Brenner, M., & Venezia, I. (1983). The effects of inflation and taxes on growth investments and replacement policies. Journal of Finance, 38(5), 1519–1528. https://doi.org/10.2307/2327584

Henderson, J. M., & Quandt, R. E. (1971). Microeconomic theory: A mathematical approach (2.ª ed.). McGraw-Hill.

Hirshleifer, J. (1970). Investment, interest and capital. Prentice-Hall.

Simon, C. P., & Blume, L. (1994). Mathematics for economists. W. W. Norton.

Varian, H. R. (1990). Intermediate microeconomics: A modern approach (2.ª ed.). W. W. Norton.

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Published

1996-04-30

How to Cite

De Faro, C. (1996). The Effect of Taxes on Growth Investments: A Note. Economic Analysis Review, 11(1), 139–142. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/154

Issue

Vol. 11 No. 1 (1996)

Section

Notes

License

Copyright (c) 1996 Clovis De Faro

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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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