Fiscal and Environmental Policy: Three Essays on the Effect on Firms' Investment and Productivity

Abstract

This thesis studies how scal and environmental policies a ect rms’ behavior and economic performance. In chapter 1, co-authored with Stefan Lamp, we focus on the e ect of tax adjustment on rms’ investment decisions. Using a detailed narrative of tax changes in Germany covering 40 years of scal adjustments, we de ne and exploit the exogenous variation of tax bills to quantify the e ect of tax changes on future investment plans of rms as well as on realized investment. In chapter 2, co-authored with Helia Costa, we study how uncertainty over environmental policy a ects rms’ investment in low-carbon technologies. We model policy uncertainty in the context of an emission trading scheme and we develop a three period sequential model. The set-up of the model combines the industry and electricity sectors and encompasses both irreversible and reversible investment possibilities for rms. Finally, in chapter 3, I investigate whether international and domestic rms’ productivity growth may be heterogeneously a ected by environmental policy. Using a novel measure of environmental policy stringency and a panel of 11 OECD countries and 22 manufacturing sectors over the period 2000-2009, I estimate the di erence in multi-factor productivity growth between multinational and domestic rms associated with a tightening of domestic environmental policy.