The paper begins with presentation of a methodology for computing rental costs of capital under any tax regime.Tax law … inflation on interest rates and the allocation of real capital. The model allocates a fixed private capital stock among various … classes of nonresidential and residential capital, depending upon the rental costs for the capital components, the price …

Second, even in the absence of fiscal costs, public debt reduces capital accumulation, and may therefore have welfare …-adjusted rate of return to capital. If it is lower than the growth rate, it indicates that the risk-adjusted rate of return to … capital is in fact low. The average risky rate however also plays a role. I show how both the average risky rate and the …