This paper examines the investment effects of tax subsidies for which some assets and not others are eligible … investment and reducing payoffs to bondholders in the event of default. Anticipation of asset substitution encourages lenders to … require covenants in debt contracts, which only imperfectly address asset substitution and distort investment. The result is …

This paper examines the investment effects of tax subsidies for which some assets and not others are eligible …. Distortionary tax subsidies encourage firms to concentrate investments in tax-favored assets profitability of investment and …, which in turn discourages investment. Borrowing rates react so strongly that aggregate investment may rise very little, or …

Governments use tax expenditures to boost investment, innovation and employment. However, these schemes are largely …

problem of finding optimal tax and subsidy schemes in a model in which growth is endogenously sustained by risky innovation …