Fischer, Marcel; Jensen, Bjarne Astrup - 2017 - This version: May 2017
We study the implications of the corporate debt tax shield in a growth economy that taxes household income and firm … differ in their endowments. Our model predicts that the debt tax shield (1) increases the risk-free rate, (2) leads to a … opportunities. We further show that the debt tax shield affects the tradeoff between the goals of achieving a high growth rate of …