Accelerated depreciation matters after all a note on the effects of the existence and the utilization of accelerated depreciation on Feldstein's extra tax on fictitious profits

Zusammenfassung Feldstein lenkt die Aufmerksamkeit von Politik und Ökonomie auf die Erhöhung der Steuerbelastung für die Unternehmungen, die bei Inflation durch die Abschreibung zu historischen Kosten (bei gleichem Steuertarif) entsteht. Er errechnet eine Formel für die Extrasteuer je Prozentpunkt Inflation, in der ein bestimmter effektiver Steuersatz eine Rolle (als Konstante) spielt. Dieser soll die Wirkung der weltweit üblichen Systeme der Investitionsbegünstigung (z. B. vorzeitige Abschreibung) berücksichtigen. Eine weitere Betrachtung dieser Systeme scheint dann nicht nötig, weil sie schon vor der Inflation geschaffen wurden. Tatsächlich hängt aber die Höhe des sogenannten effektiven Steuersatzes selbst von der Inflation ab. Der Wert der vorzeitigen Abschreibung steigt in der Inflation und wirkt der Steuererhöhung entgegen. Im Extremfall einer sofortigen vollen Abschreibung wird die Extrasteuer Null.Die stärkere Vorteilhaftigkeit der vorzeitigen Abschreibung in der Inflation (verglichen mit der Normalabschreibung zu historischen Kosten) läßt eine stärkere Ausnutzung der vorzeitigen Abschreibung im inflationären Fall erwarten. Gründe gegen die volle Ausnutzung dieser Begünstigung (fehlende Gewinne, Informationskosten) bei stabiler und inflationärer Preisentwicklung werden diskutiert.     

Revisiting an Evasive Concept: Introduction to the Special Issue on Competitiveness

The term competitiveness stems from the analysis of firms and is usually thought to be well defined at the firm level. Today, however, the notion competitiveness has become a prominent concept in the assessment of countries, regions and locations. The competitive advantage of nations and the competitiveness of locations have become important topics in economic policy. Interest in this field has been notably stimulated by the work of Michael Porter. Although the diversity of approaches presented in this issue may appear large to the reader, it is in reality dwarfed by the multiplicity of concepts, articles and books which have been written in reference to the term competitiveness. The vagueness of the general term, the lack of theoretical background, implicit preferences and prejudices, and finally the scope of policy recommendations made in reference to this term have induced outstanding researchers to warn that the term competitiveness of a nation could be dangerous, obsessive, elusive or meaningless.¹ The articles presented in this volume share some elements of this critique, but also demonstrate that research is being continued, and that it is indeed relevant to the design and evaluation of economic policy, most notably, the so-called Lisbon Strategy of the European Union.     

Reply on comment to “small firms and the merger mania”

Research on performance differences between small and large firms is booming. It emerges relatively separated from the mainstream Industrial Organization Literature. Inspired by Levy's comment on an earlier paper we try to bridge the gap between the two areas. Especially we screen non cooperative game theoretical models for predictions on performance differences. Most of them forecast higher profits for larger firms, but there exist also some models which predict the opposite for very specific circumstances.     

Confronting the implications of the Cournot model with industry and firm data

This paper derives testable implications of the standard Cournot models and confronts these implications with real world data. Though we cannot expect that real world may be characterized by a simple static homogeneous model, it is surprising that little empirical work exists on testing the implications of this most popular model of oligopoly and non cooperative game theory.We make use of three data sets for manufacturing industry, two of them on the firm level, one about firms grouped according to their size. The relation of the results to the predictions of the Cournot model is discussed, as well as its relation to alternative oligopoly models. We specifically focus at the question whether the implications of the oligopoly models on the performance of large versus small firms are in line with the data.     

Does it Pay to be Flexible?

This paper addresses the determinants of price-cost margins inU.S. 4-digit industries. Margins are larger in capital intensive andconcentrated industries with high growth rates and R & D andadvertising to sales ratios. They also fluctuate significantly overthe business cycle. We go beyond the existing literature byconsidering an issue which is a dominant topic in the businessliterature, the flexibility of firms to adjust to exogenous shocks.In particular, we find a significant positive relationship betweenthe flexibility of labour demand and price cost marginssuggesting that it pays to be flexible.     

Explaining Differences in Economic Growth among OECD Countries

This paper re-examines the determinants of growth of GDP per capita using panel data for OECD countries for the period 1970–1999 with data averaged over five-year periods from new perspectives. First, we introduce indicators of innovation input and technological specialization simultaneously into the empirical growth equation. Second, we employ the system-GMM (Generalized-Method-of-Moments) panel estimator that controls for (a) the possible specification bias when variables are highly persistent over time and (b) the possible simultaneity bias. We find a large and statistically significant impact of business enterprise R&D (BERD) intensity on GDP per capita with an elasticity of 0.22. The share of high-technology exports is also significantly positively related to GDP per capita, but the magnitude suggests that BERD is more important than technological specialization in explaining the level of GDP per capita. Furthermore, we find that the budget deficit and government consumption (both measured as percentages of GDP) and the volatility of growth are significantly negatively related to GDP per capita.The authors would like to thank Gunther Tichy for helpful comments on an earlier draft of this article. We also thank the participants of the Austrian economic association conference (NOEG) and the Empirical Industrial Organization workshop at the WU WIEN for helpful comments. We gratefully acknowledge financial support from the OeNB Jubiläumsfonds Project and the Austrian Federal Ministry for Economy and Labor (BMWA).JEL codes: E62, H20, H50, O23, O40     

The Economic Agenda: a View from Europe

Over the course of the 1990s, the US outperformed Europe not only in output growth, but also in productivity and employment generation, thereby stopping Europe's decade‐long period of catching up. The author shows that the growth difference originates at least partly from insufficient investment by Europe into the determinants of long‐run growth (research, education, and the diffusion of new technologies). Northern European countries with comprehensive welfare systems performed better than the big economies in continental Europe, owing to their timely realization that these costly systems require the highest possible levels of productivity and fast growth. The European agenda for the next decade is based on this analysis. It stresses the importance of accelerating economic growth, primarily through investment into growth drivers. Labor market reforms are necessary, as is the redefinition of macroeconomic policy, a regional policy adequate for European enlargement, and reforms in the public sector. Distributional and ecological issues are also on the agenda, even though Europe outperforms the US in these fields, as is reflective of European preferences.