This paper develops a new-Keynesian model with nominal depreciation allowances to consider the effects of temporary tax-based investment incentives on capital spending and real activity. In particular, we investigate the effects of a temporary expensing allowance on investment in partial and...

This Paper Presents Empirical Evidence on Both These Effects by Studying Version of the Hall-Jorgenson Model Estimated From U.S. Data (1956-1972) by Gordon Investment Tax Credits over This Period Suggest That the Lucas Effects May Be Observable in This Example. for This Purpose, We Use Recursive...