In 2008, Germany introduced an interest barrier which allows the deduction of interest only if a company's net interest expenditure does not exceed 30% of the company's EBITDA. The regulation aims at preventing excessive debt financing of companies resident in Germany and distinguishes neither...

We consider the Merton problem with capital gain taxes. Since closed-form solutions are generally unavailable, we provide asymptotic expansions with small interest rate and other parameters, and then obtain an explicit investment and consumption strategy that effectively approximates the optimal...

Several industrialized countries impose withholding taxes on public interest accruing to nonresidents. This paper examines the international incidence of such withholding taxes by estimating to what extent these taxes raise the cost of government borrowing. It is found that the pretax interest...