报告题目：Can Tax Credit Undo Capital Misallocation? -- Evidence from China's VAT Transformation Reform

报 告 人：陈晓光

时   间：2023年6月16日 上午10:00-12:00

地   点：西安交通大学创新港涵英楼经济金融研究院8001会议室

报告人简介：

Shawn (Xiaoguang) Chen is a Senior Lecturer at the Business School of the University of Western Australia. He is also a Research Affiliate of the TTPI at Australian National University, Research Fellow with the NIFS based at Tsinghua University, the IPFT at Renmin University of China, the CCIE at Central University of Finance and Economics. His research focuses on how tax systems and rent extraction affect productivity, development and growth. His papers published in Journal of Public Economics, Journal of Law, Economics, and Organization, Economic Letters, International Tax and Public Finance, Journal of Tax Administration, China Economic Review, and in top Chinese journals including Social Science in China (in Chinese《中国社会科学》), Economic Research Journal (in Chinese,《经济研究》). His work received the Gregory Chow Best Paper Award, and Best Paper Award from the First Public Finance Forum of China. Personal website: https://sites.google.com/site/xgchenist/

摘要：

We investigate the effect of investment tax credit on allocative efficiency of capital across firms. Most existing studies examined the average effect on investment of individual firms, and found that the lumpy investment caused by investment frictions plays an important role in that average effect. We argue that the investment frictions should affect both upward and downward adjustment in capital. In a monopolistic competitive market, the rise of some firms’ market share should be accompanied by the fall of others. Tax credit may not only incentivize investment of some firms but also boost dis-investment of others. Motivated by that argument, we focus on the heterogeneous effect across firms characterised by their initial MRPK (or TFP) in order to examine the capital reallocation. Based on the first two pilots of VAT transformation reform in China and firm data from Annual Survey of Industrial Production conducted (2000-2008), we employ the Difference-in-Difference-in-Differences (DDD) to identify the effect of investment tax credit on firms' real capital stock and marginal revenue product of capital (MRPK). The results suggest that the tax credit reform led to reallocation of capital and convergence in MRPK across firms. The reallocation improves the aggregate efficiency measured by various indicators. However, regressions including stronger fixed effects do not show significant effects either on firms' average TFP or on dispersion in firms' market power. The finding suggests that we should be cautious about the average effect of tax incentives on investment since it could be small, ambiguous, or not robust due to opposing heterogeneous effects across firms; while that the effect on the aggregate efficiency could be salient thanks to the capital reallocation.

经济与金融学院

2023年6月7日