02061cas a2200289 a 4500 AALejournalIMF022098 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498300889 1018-5941 BD-DhAAL BD-DhAAL Gbohoui, William. Financial Frictions and Stimulative Effects of Temporary Corporate Tax Cuts / William Gbohoui, Rui Castro. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper uses an industry equilibrium model where some firms are financially constrained to quantify the effects of a transitory corporate tax cut funded by a future tax increase on the U.S. economy. It finds that by increasing current cash-flows tax cuts alleviate financing frictions, hereby stimulating current investment. Per dollar of tax stimulus, aggregate investment increases by 26 cents on impact, and aggregate output by 3.5 cents. The average effect masks heterogeneity: multipliers are close to 1 for constrained firms, especially new entrants, and negative for larger and unconstrained firms. The output effects extend well past the period the policy is reversed, leading to a cumulative multiplier of 7.2 cents. Multipliers are significantly larger when controlling for the investment crowding-out effect among unconstrained firms. Mode of access: Internet Foreign Exchange imf Informal Economy imf Underground Econom imf Castro, Rui. IMF Working Papers; Working Paper ; No. 2019/097 Full text available on IMF http://elibrary.imf.org/view/journals/001/2019/097/001.2019.issue-097-en.xml IMF e-Library