Projects / Programmes
Izgradnja simulacijskega modela za davek od dohodkov pravnih oseb (Slovene)
| Code |
Science |
Field |
Subfield |
| 5.02.00 |
Social sciences |
Economics |
|
| Code |
Science |
Field |
| 5.02 |
Social Sciences |
Economics and Business |
Researchers (6)
Organisations (1)
| no. |
Code |
Research organisation |
City |
Registration number |
No. of publicationsNo. of publications |
| 1. |
0502 |
Institute for Economic Research |
Ljubljana |
5051690000 |
2,469 |
Significance for science
First, we investigated the effect of financial constraints on the investments in Slovenian firms during the current economic crisis. By estimating an error-correction model and Euler-equation specification, we found that corporate investments are significantly affected by financial constraints. The effect of financial constraints intensified in 2009 and slightly alleviated in 2010; however, being still significantly more intense than in 2008. The results indicate that financial constraints have significant effect in more, as well as less levered firms; however, corporate investments being more severely affected in firms that operate with above average leverage. Firms operating with above-average leverage have also more severe difficulties in closing the gap between desired and actual stock of capital.
Second, we investigated the effects of corporate taxation, in particular investment tax allowances, on the corporate investment in Slovenian firms. Since Slovenian firms tend to be recently to a large extent financially constraint, we modelled the tax effects in our investment equation via two different channels; one being crucial for financial unconstrained firms and the other for financially constrained firms. For financially unconstrained firms, corporate investments are affected by taxes through the user cost of capital, while for financially unconstrained firms the effect that materializes through the cash flow effect is expected to prevail. We found only weak evidence of the tax effect that materialize through the cash flow effect on the corporate investments, but we did not find any significant effect of the cost of capital.
The research project thus led us to original scientific findings in the fields of economic theory and practice, where the majority of the most current findings in the field of corporate income tax were used. The above scientific findings are therefore very likely to raise significant responses domestically and internationally; not only in the academia but also in the applied fields of policy analysis and research.
Significance for the country
The finding of non-response of corporate investments to increases in investment tax allowances and to decreases in the corporate income tax rate is of exceptional importance for conducting economic policy in the Republic of Slovenia, as well as for the scientific research community and academic community. It enables adjusting the economic policy measures, related to setting investment tax allowances and the corporate income tax rate, and consequently also related to the redistribution of public finance revenues for other, currently more important and more efficient purposes.
The simulation model for corporate income tax, developed during this research project, will serve as a basis for decision-makers to simulate the effects of different scenarios of corporate income taxation. The results obtained can later serve as an input to a general equilibrium model that facilitates the assessment of dynamic effects of a given economic measure at the macro and industry levels. The project, carried out successfully, offers the necessary information, needed by the Ministry of Finance of the Republic of Slovenia and the Government of the Republic of Slovenia in order to prepare a suitable economic policy mix, i.e. suitable changes in corporate income taxation as a basis for increasing the competitiveness of the Slovenian economy and to give the much needed momentum to economic growth.
The research project enables access to foreign knowledge in the field of economic modelling and at the same time contributes to the international stock of knowledge. Namely, the scientific findings are very likely to raise significant responses in the academia domestically and internationally. As such, the research project enables the promotion of Slovenian science and the State of Slovenia per se.
Most important scientific results
Final report,
complete report on dLib.si
Most important socioeconomically and culturally relevant results
Final report,
complete report on dLib.si
