Dynamic Behaviour of the Firm Under Dual Income Taxation

accelerated adjustment path allowances amount analysis applied approach assets assume assumption basic model behaviour capital base capital gains capital income capital stock changes chapter condition constant constraint continuity cost of capital countries debt defined dependent depicts describe discussed dividend taxation earned income economic effective equal equation equilibrium equity expression Figure final financial capital financing Finland Finnish firm firm's firm's capital first-order conditions fiscal depreciation framework function gives graduated dividend taxation growth implies imputation incentive included income tax income taxation increase initial interest investment later linear lower marginal tax rate markets means negative Nordic Note observed obtain operating optimal parameter path pays phase present problem profits q₁ real capital regime A3 requirement respect retained rise satisfied shadow prices share shareholders showed shown side solution steady-state capital stock substituting switch Table tax system term tion