{"id":{"repo_id":"mit","oai_identifier":"oai:dspace.mit.edu:1721.1/151562"},"canonical_url":"https://search.dev.ndltd.org/etd/mit/oai:dspace.mit.edu:1721.1/151562","repository":{"repo_id":"mit","name":"MIT","base_url":"https://dspace.mit.edu/oai/request"},"display":{"title":"Inflation, Taxation and Corporate Investment in the U.S. During the Great Inflation","abstract":"U.S. corporate taxation is not neutral to inflation. Two of its features – historical cost depreciation and FIFO inventory accounting – are expected to lower real after-tax corporate cash flows and, thereby, make investment less attractive when expected inflation is elevated. Using Compustat data for 1965-1980 and a difference-in-differences research design, I do not find evidence in support of this hypothesis. I discuss possible explanations for this non-result. In addition, I find a robust effect of statutory tax changes on corporate investment during the Great Inflation. The effect is economically meaningful and consistent with the prior literature: a tax reform that increases firm's cost of capital by 10% lowers investment of affected firms by 2 percentage points of total assets relative to firms not affected by the reform.","abstract_html":"U.S. corporate taxation is not neutral to inflation. Two of its features – historical cost depreciation and FIFO inventory accounting – are expected to lower real after-tax corporate cash flows and, thereby, make investment less attractive when expected inflation is elevated. Using Compustat data for 1965-1980 and a difference-in-differences research design, I do not find evidence in support of this hypothesis. I discuss possible explanations for this non-result. In addition, I find a robust effect of statutory tax changes on corporate investment during the Great Inflation. The effect is economically meaningful and consistent with the prior literature: a tax reform that increases firm's cost of capital by 10% lowers investment of affected firms by 2 percentage points of total assets relative to firms not affected by the reform.","abstract_has_math":false,"creators":["Usenko, Yevhenii"],"institution":"Massachusetts Institute of Technology","degree_name":"Master","degree_level":null,"degree_discipline":null,"degree_department":"Sloan School of Management","school":null,"contributors":[],"advisors":["Verner, Emil"],"committee_chairs":[],"committee_members":[],"year":2023,"date_issued":"2023-06","date_published":"2023-06","updated_at":"2026-07-22T22:20:59Z","subjects":[],"languages":[],"rights":["In Copyright - Educational Use Permitted","Copyright retained by author(s)"],"rights_urls":["https://rightsstatements.org/page/InC-EDU/1.0/"],"identifier_entries":[]},"links":{"outbound_url":"https://hdl.handle.net/1721.1/151562","outbound_label":"Handle","outbound_source":"dc:identifier.uri"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor.advisor","label":"Advisor","values":["Verner, Emil"]},{"key":"dc:contributor.department","label":"Department","values":["Sloan School of Management"]},{"key":"dc:creator","label":"Author","values":["Usenko, Yevhenii"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date.accessioned","label":"Dc Date Accessioned","values":["2023-07-31T19:48:46Z"]},{"key":"dc:date.available","label":"Dc Date Available","values":["2023-07-31T19:48:46Z"]},{"key":"dc:date.issued","label":"Date","values":["2023-06"]},{"key":"dc:publisher","label":"Institution","values":["Massachusetts Institute of Technology"]},{"key":"dc:type","label":"Dc Type","values":["Thesis"]},{"key":"thesis:degree_name","label":"Degree Name","values":["Master","Master of Science in Management Research"]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:rights","label":"Dc Rights","values":["In Copyright - Educational Use Permitted","Copyright retained by author(s)"]},{"key":"dc:rights.uri","label":"Rights URI","values":["https://rightsstatements.org/page/InC-EDU/1.0/"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier.uri","label":"Identifier URI","values":["https://hdl.handle.net/1721.1/151562"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description.abstract","label":"Abstract","values":["U.S. corporate taxation is not neutral to inflation. Two of its features – historical cost depreciation and FIFO inventory accounting – are expected to lower real after-tax corporate cash flows and, thereby, make investment less attractive when expected inflation is elevated. Using Compustat data for 1965-1980 and a difference-in-differences research design, I do not find evidence in support of this hypothesis. I discuss possible explanations for this non-result. In addition, I find a robust effect of statutory tax changes on corporate investment during the Great Inflation. The effect is economically meaningful and consistent with the prior literature: a tax reform that increases firm's cost of capital by 10% lowers investment of affected firms by 2 percentage points of total assets relative to firms not affected by the reform."]},{"key":"dc:description.degree","label":"Dc Description Degree","values":["S.M."]},{"key":"dc:title","label":"Title","values":["Inflation, Taxation and Corporate Investment in the U.S. During the Great Inflation"]}]}],"canonical_facts":{"dc:contributor.advisor":["Verner, Emil"],"dc:contributor.department":["Sloan School of Management"],"dc:creator":["Usenko, Yevhenii"],"dc:date.accessioned":["2023-07-31T19:48:46Z"],"dc:date.available":["2023-07-31T19:48:46Z"],"dc:date.issued":["2023-06"],"dc:description.abstract":["U.S. corporate taxation is not neutral to inflation. Two of its features – historical cost depreciation and FIFO inventory accounting – are expected to lower real after-tax corporate cash flows and, thereby, make investment less attractive when expected inflation is elevated. Using Compustat data for 1965-1980 and a difference-in-differences research design, I do not find evidence in support of this hypothesis. I discuss possible explanations for this non-result. In addition, I find a robust effect of statutory tax changes on corporate investment during the Great Inflation. The effect is economically meaningful and consistent with the prior literature: a tax reform that increases firm's cost of capital by 10% lowers investment of affected firms by 2 percentage points of total assets relative to firms not affected by the reform."],"dc:description.degree":["S.M."],"dc:identifier.uri":["https://hdl.handle.net/1721.1/151562"],"dc:publisher":["Massachusetts Institute of Technology"],"dc:rights":["In Copyright - Educational Use Permitted","Copyright retained by author(s)"],"dc:rights.uri":["https://rightsstatements.org/page/InC-EDU/1.0/"],"dc:title":["Inflation, Taxation and Corporate Investment in the U.S. During the Great Inflation"],"dc:type":["Thesis"],"thesis:degree_name":["Master","Master of Science in Management Research"]},"updated_at":"2026-07-22T22:20:59Z"}