Dale Jorgenson

Samuel W. Morris University Professor

Investment, Vol. 2, Table of Contents

Contents

List of Tables			ix
Preface			xv
List of Sources			xxxiii

1 Tax Policy and Investment Behavior			1
	Robert E. Hall and Dale W. Jorgenson
	1.1 Tax Policy and the Cost of Capital Services		2
	1.2 Estimates of the parameters of the Investment Function		8
	1.3 The Effects of Tax Policy on Investment Behavior		15
	1.4 Conclusion		23

2 Application of the Theory of Optimum Capital Accumulation			27
		Robert E. Hall and Dale W. Jorgenson
		2.1 Theory of Investment Behavior	29
		2.2 Econometrics of Investment behavior	39
		2.3 Estimates of the parameters of the Investment Functions	44
		2.4 Impact of Tax Policy on Investment behavior	58
		2.5 Conclusion	73

3 Technology and Decision Rules in the Theory of Investment Behavior			77
		Dale W. Jorgenson
		3.1 Introduction	77
		3.2 Technology	79
		3.3 Objective Function	83
		3.4 Optimal Investment Policy	88
		3.5 Decision Rules	91

4 The Economic Impact of Investment Incentives			101
		Dale W. Jorgenson
		4.1 Introduction	101
		4.2 Postwar Investment Incentives in the U.S.	102
		4.3 The Economic Analysis of Investment Incentives	104
		4.4 Current Policy Alternatives	107
		4.5 Direct Impact	110
		4.6 Total Impact	114
		4.7 Conclusion	121
		Technical Appendix	121

5 The Economic Theory of Replacement and Depreciation			125
		Dale W. Jorgenson
		5.1 Introduction	125
		5.2 Replacement	126
		5.3 Depreciation	140
		5.4 Form of the Replacement distribution	146
		5.5 Summary and Conclusion	154

6. Investment and production: A Review			157
		Dale W. Jorgenson
		6.1 Introduction	157
		6.2 Form of the Production Function: Cross Sections	161
		6.3 Form of the Production Function: Time Series	165
		6.4 Returns to Scale	170
		6.5 Conclusion	175

7 The Investment Tax Credit and Counter-Cyclical Policy			181
		Roger H. Gordon and Dale W. Jorgenson
		7.1 Summary	181
		7.2 Introduction	182
		7.3 Impact of the Investment Tax Credit	184
		7.4 Alternative Investment Tax Credits	192
		7.5 Conclusion	208
		Appendix A: The Investment Equation	209
		Appendix B: Optimization Procedures	216

8 Inflation-Proof Depreciation of Assets			223
		Alan J. Auerbach and Dale W. Jorgenson
		8.1 The First-Year System...	224
		8.2 Administrative Aspects	226
		8.3 ... Against Two Others	227
		8.4 Future Economic Impact	229
		8.5 A Better Way	231
		Appendix	232

9 Inflation and Corporate Capital Recovery			235
		Dale W. Jorgenson and Martin A. Sullivan
		9.1 Introduction	235
		9.2 Theoretical Framework	239
		9.3 Empirical Implementation	242
		9.4 Capital Recovery During the Postwar Period	258
		9.5 Proposed Systems for Capital Recovery	271
		9.6 Conclusions	283
		Appendix	289

10 The Efficiency of Capital Allocation			299
		Dale W. Jorgenson and Kun-Young Yun
		10.1 Introduction	299
		10.2 Technology and Preferences	301
		10.3 General Equilibrium Model	310
		10.4 Conclusion	318
		Appendix: List of Instrumental Variables	319

11 Tax Policy and Capital Allocation			321
		Dale W. Jorgenson and Kun-Young Yun
		11.l Introduction	321
		11.2 Tax policy	324
		11.3 Technology and preferences	332
		11.4 General Equilibrium Model	340
		11.5 Tax Reform	351
		11.6 Conclusion	360
		Appendix: List of Instrumental Variables	362

12 Tax Reform and U.S. Economic Growth			365
		Dale W. Jorgenson and Kun-Young Yun
		12.1 Introduction	365
		12.2 Tax Reform	369
		12.3 Effective Tax Rates	382
		12.4 Economic Growth	395
		12.5 Conclusion	407

13 The Excess Burden of Taxation in the U.S.			411
		Dale W. Jorgenson and Kun-Young Yun
		13.1 Introduction	411
		13.2 Analytical Framework	414
		13.3 Efficiency Costs of Taxation	421
		13.4 Conclusion	428

References			435
Index			457