{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,10,8]],"date-time":"2026-10-08T17:01:30Z","timestamp":1791478890588,"version":"4.3.4"},"reference-count":56,"publisher":"Oxford University Press (OUP)","issue":"2","license":[{"start":{"date-parts":[[2022,6,8]],"date-time":"2022-06-08T00:00:00Z","timestamp":1654646400000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/academic.oup.com\/pages\/standard-publication-reuse-rights"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"published-print":{"date-parts":[[2023,3,6]]},"abstract":"<jats:title>Abstract<\/jats:title>\n                  <jats:p>We incorporate the lumpy nature of firm-level investment into the study of how tax policy affects investment behaviour. We show that tax policies can directly impact the lumpiness of investment. Extensive-margin responses to tax policy are key to understanding the effects of different tax reforms and to designing effective stimulus policies. We illustrate these results by studying China\u2019s 2009 VAT reform, which lowered the tax cost of investment and reduced partial irreversibility\u2014the price gap between new and used capital. Using comprehensive tax survey data and a difference-in-differences design, we estimate a 36$\\%$ relative investment increase that is driven by investment spikes. Using a dynamic investment model that fits the reduced-form effects of the reform, we show that policies that directly reduce the likelihood of firm inaction are more effective at stimulating investment.<\/jats:p>","DOI":"10.1093\/restud\/rdac027","type":"journal-article","created":{"date-parts":[[2022,5,10]],"date-time":"2022-05-10T15:20:08Z","timestamp":1652196008000},"page":"634-674","source":"Crossref","is-referenced-by-count":109,"title":["Tax Policy and Lumpy Investment Behaviour: Evidence from China\u2019s VAT Reform"],"prefix":"10.1093","volume":"90","author":[{"given":"Zhao","family":"Chen","sequence":"first","affiliation":[{"name":"Fudan University"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Xian","family":"Jiang","sequence":"additional","affiliation":[{"name":"University of California, Davis"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Zhikuo","family":"Liu","sequence":"additional","affiliation":[{"name":"Fudan University"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Juan Carlos Su\u00e1rez","family":"Serrato","sequence":"additional","affiliation":[{"name":"Duke University & NBER"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Daniel Yi","family":"Xu","sequence":"additional","affiliation":[{"name":"Duke University & NBER"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"286","published-online":{"date-parts":[[2022,6,8]]},"reference":[{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"39","DOI":"10.1016\/0167-2231(80)90021-4","article-title":"Empirical Investment Equations: An Integrative Framework","volume":"12","author":"ABEL","year":"1980","journal-title":"Carnegie-Rochester Conference Series on Public Policy"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1553","DOI":"10.1093\/qje\/qjx023","article-title":"Measuring the Sensitivity of Parameter Estimates to Estimation Moments","volume":"132","author":"ANDREWS","year":"2017","journal-title":"The Quarterly Journal of Economics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"533","DOI":"10.1016\/j.jmoneco.2012.06.006","article-title":"Firm Dynamics and Financial Development","volume":"59","author":"ARELLANO","year":"2012","journal-title":"Journal of Monetary Economics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"205","DOI":"10.2307\/2297647","article-title":"The Dynamic Effects of Tax Law Asymmetries","volume":"53","author":"AUERBACH","year":"1986","journal-title":"The Review of Economic Studies"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"939","DOI":"10.2307\/2526760","article-title":"Tax Reform and Adjustment Costs: The Impact on Investment and Market Value","volume":"30","author":"AUERBACH","year":"1989","journal-title":"International Economic Review"},{"key":"2023030719093541900_","first-page":"211","article-title":"Investment Tax Incentives and Frequent Tax Reforms","volume":"78","author":"AUERBACH","year":"1988","journal-title":"American Economic Review"},{"key":"2023030719093541900_","first-page":"29","article-title":"Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model","volume":"5","author":"BACHMANN","year":"2013","journal-title":"American Economic Journal: Macroeconomics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"129","DOI":"10.1353\/eca.2016.0027","article-title":"The Long Shadow of a Fiscal Expansion","author":"BAI","year":"2016","journal-title":"Brookings Papers on Economic Activity"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"61","DOI":"10.1353\/eca.2007.0000","article-title":"The Return to Capital in China","volume":"2006","author":"BAI","year":"2006","journal-title":"Brookings Papers on Economic Activity"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1235","DOI":"10.3982\/ECTA17344","article-title":"Aggregate Dynamics in Lumpy Economies","volume":"89","author":"BALEY","year":"2021","journal-title":"Econometrica: Journal of the Econometric Society"},{"key":"2023030719093541900_","article-title":"The Macroeconomic Effects of Corporate Tax Reforms","author":"BALEY","year":"2021"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"257","DOI":"10.1353\/eca.2018.0003","article-title":"Macroeconomic Effects of the 2017 Tax Reform","volume":"49","author":"BARRO","year":"2018","journal-title":"Brookings Papers on Economic Activity"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"321","DOI":"10.1080\/07474930008800475","article-title":"GMM Estimation with Persistent Panel Data: An Application to Production Functions","volume":"19","author":"BLUNDELL","year":"2000","journal-title":"Econometric Reviews"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"783","DOI":"10.1111\/1468-0262.00053","article-title":"Explaining Investment Dynamics in US Manufacturing: A Generalized (S, s) Approach","volume":"67","author":"CABALLERO","year":"1999","journal-title":"Econometrica"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"163","DOI":"10.1177\/0019793919889609","article-title":"Industrial Policy in China: Some Unintended Consequences?","volume":"74","author":"CAI","year":"2021","journal-title":"Industrial and Labor Relations Review"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"913","DOI":"10.1007\/s10797-017-9475-y","article-title":"The Effect of Investment Tax Incentives: Evidence from China\u2019s Value-Added Tax Reform","volume":"25","author":"CHEN","year":"2018","journal-title":"International tax and public finance"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"2065","DOI":"10.1257\/aer.20191758","article-title":"Notching R&D Investment with Corporate Income Tax Cuts in China","volume":"111","author":"Chen","year":"2021","journal-title":"American Economic Review"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"2362","DOI":"10.1016\/j.jpubeco.2008.07.005","article-title":"State Investment Tax Incentives: A Zero-Sum Game?","volume":"92","author":"CHIRINKO","year":"2008","journal-title":"Journal of Public Economics"},{"key":"2023030719093541900_","first-page":"1","article-title":"Entry, Exit, Firm Dynamics, and Aggregate Fluctuations","volume":"8","author":"CLEMENTI","year":"2016","journal-title":"American Economic Journal: Macroeconomics"},{"key":"2023030719093541900_","article-title":"Sales Taxation of Business Inputs: Existing Tax Distortions and the Consequences of Extending the Sales Tax to Business Services","volume":"35","author":"CLINE","year":"2005","journal-title":"State Tax Notes"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"3412","DOI":"10.1093\/rfs\/hhz008","article-title":"Credit Allocation under Economic Stimulus: Evidence from China","volume":"32","author":"CONG","year":"2019","journal-title":"The Review of Financial Studies"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"611","DOI":"10.1111\/j.1467-937X.2006.00389.x","article-title":"On the Nature of Capital Adjustment Costs","volume":"73","author":"COOPER","year":"2006","journal-title":"The Review of Economic Studies"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1","DOI":"10.2307\/2534654","article-title":"A Reconsideration of Investment Behavior using Tax Reforms as Natural Experiments","volume":"1994","author":"CUMMINS","year":"1994","journal-title":"Brookings Papers on Economic Activity"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"2531","DOI":"10.1257\/aer.20180336","article-title":"The Sources of Capital Misallocation","volume":"109","author":"DAVID","year":"2019","journal-title":"American Economic Review"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","DOI":"10.1016\/j.jpubeco.2003.08.004","article-title":"Foreign Direct Investment in a World of Multiple Taxes","volume":"88","author":"DESAI","year":"2004","journal-title":"Journal of Public Economics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1001","DOI":"10.2307\/2171954","article-title":"Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach","volume":"64","author":"DINARDO","year":"1996","journal-title":"Econometrica"},{"key":"2023030719093541900_","volume-title":"The Modern VAT","author":"EBRILL","year":"2001"},{"key":"2023030719093541900_","article-title":"Managing Indirect Tax Refunds","year":"2017"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"121","DOI":"10.1162\/003355398555540","article-title":"Investment Tax Incentives, Prices, and the Supply of Capital Goods","volume":"113","author":"GOOLSBEE","year":"1998","journal-title":"Quarterly Journal of Economics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1","DOI":"10.1016\/j.jmoneco.2007.06.004","article-title":"Investment Spikes: New Facts and a General Equilibrium Exploration","volume":"54","author":"GOURIO","year":"2007","journal-title":"Journal of Monetary Economics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1901","DOI":"10.1111\/0022-1082.00277","article-title":"How Big Are the Tax Benefits of Debt?","volume":"55","author":"GRAHAM","year":"2000","journal-title":"The Journal of Finance"},{"key":"2023030719093541900_","first-page":"391","article-title":"Tax Policy and Investment Behavior","volume":"57","author":"HALL","year":"1967","journal-title":"American Economic Review"},{"key":"2023030719093541900_","first-page":"1293","article-title":"Tax Policy and Business Investment","volume-title":"Handbook of Public Economics","author":"HASSETT","year":"2002"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"213","DOI":"10.2307\/1912538","article-title":"Tobin\u2019s Marginal q and Average q: A Neoclassical interpretation","volume":"50","author":"HAYASHI","year":"1982","journal-title":"Econometrica: Journal of the Econometric Society"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1705","DOI":"10.1111\/j.1540-6261.2007.01255.x","article-title":"How Costly Is External Financing? Evidence from a Structural Estimation","volume":"62","author":"HENNESY","year":"2007","journal-title":"The Journal of Finance"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","DOI":"10.3386\/w23391","article-title":"Stimulus Effects of Investment Tax Incentives: Production versus Purchases","author":"HOUSE","year":"2017"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"737","DOI":"10.1257\/aer.98.3.737","article-title":"Temporary Investment Tax Incentives: Theory with Evidence from Bonus Depreciation","volume":"98","author":"HOUSE","year":"2008","journal-title":"The American Economic Review"},{"key":"2023030719093541900_","first-page":"1","article-title":"Intermediate Goods and Weak Links in the Theory of Economic Development","volume":"3","author":"JONES","year":"2011","journal-title":"American Economic Journal: Macroeconomics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"395","DOI":"10.1111\/j.1468-0262.2008.00837.x","article-title":"Idiosyncratic Shocks and the Role of Nonconvexities in Plant and Aggregate Investment Dynamics","volume":"76","author":"KHAN","year":"2008","journal-title":"Econometrica"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"2383","DOI":"10.1257\/aer.20160131","article-title":"The Market for Used Capital: Endogenous Irreversibility and Reallocation over the Business Cycle","volume":"108","author":"LANTERI","year":"2018","journal-title":"American Economic Review"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"317","DOI":"10.1111\/1467-937X.00246","article-title":"Estimating Production Functions Using Inputs to Control for Unobservables","volume":"70","author":"LEVINSOHN","year":"2003","journal-title":"The Review of Economic Studies"},{"key":"2023030719093541900_","first-page":"261","article-title":"How Do Tax Incentives Affect Investment and Productivity? Firm-Level Evidence from China","volume":"11","author":"LIU","year":"2019","journal-title":"American Economic Journal: Economic Policy"},{"key":"2023030719093541900_","first-page":"361","article-title":"The Impact of Investment Incentives: Evidence from UK Corporation Tax Returns","volume":"11","author":"MAFFINI","year":"2019","journal-title":"American Economic Journal: Economic Policy"},{"key":"2023030719093541900_","article-title":"Announcement on Deepening VAT Reform","author":"Ministry of","year":"2019"},{"key":"2023030719093541900_","article-title":"Capital Gains Taxes and Real Corporate Investment","author":"MOON","year":"2019"},{"key":"2023030719093541900_","article-title":"China Statistical Yearbook","author":"NBS","year":"2018"},{"key":"2023030719093541900_","first-page":"272","article-title":"The Effect of Corporate Taxation on Investment and Financial Policy: Evidence from the DPAD","volume":"10","author":"OHRN","year":"2018","journal-title":"American Economic Journal: Economic Policy"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"104084","DOI":"10.1016\/j.jpubeco.2019.104084","article-title":"The Effect of Tax Incentives on U.S. Manufacturing: Evidence from State Accelerated Depreciation Policies","volume":"180","author":"OHRN","year":"2019","journal-title":"Journal of Public Economics"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"2473","DOI":"10.3982\/ECTA15949","article-title":"Financial Heterogeneity and the Investment Channel of Monetary Policy","volume":"88","author":"OTTONELLO","year":"2020","journal-title":"Econometrica: Journal of the Econometric Society"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"958","DOI":"10.1086\/322828","article-title":"Displaced Capital: A Study of Aerospace Plant Closings","volume":"109","author":"RAMEY","year":"2001","journal-title":"Journal of Political Economy"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"1","DOI":"10.1016\/j.jpubeco.2016.05.003","article-title":"Do Tax Credits Stimulate R&D Spending? The Effect of the R&D Tax Credit in its First Decade","volume":"140","author":"RAO","year":"2016","journal-title":"Journal of Public Economics"},{"key":"2023030719093541900_","first-page":"247","article-title":"Tax Reform and Corporate Investment: A Microeconometric Simulation Study","author":"SALINGER","year":"1983"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"67","DOI":"10.2307\/2534397","article-title":"Taxation and Corporate Investment: A q-Theory Approach","volume":"1981","author":"SUMMERS","year":"1981","journal-title":"Brookings Papers on Economic Activity"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"364","DOI":"10.1257\/aer.20161723","article-title":"Lumpy Investment, Business Cycles, and Stimulus Policy","volume":"111","author":"WINBERRY","year":"2021","journal-title":"American Economic Review"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"3531","DOI":"10.1257\/aer.20130098","article-title":"Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut","volume":"105","author":"YAGAN","year":"2015","journal-title":"The American Economic Review"},{"key":"2023030719093541900_","doi-asserted-by":"crossref","first-page":"217","DOI":"10.1257\/aer.20140855","article-title":"Tax Policy and Heterogeneous Investment Behavior","volume":"107","author":"ZWICK","year":"2017","journal-title":"The American Economic Review"}],"container-title":["The Review of Economic Studies"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/academic.oup.com\/restud\/advance-article-pdf\/doi\/10.1093\/restud\/rdac027\/43994608\/rdac027.pdf","content-type":"application\/pdf","content-version":"am","intended-application":"syndication"},{"URL":"https:\/\/academic.oup.com\/restud\/article-pdf\/90\/2\/634\/49435181\/rdac027.pdf","content-type":"application\/pdf","content-version":"vor","intended-application":"syndication"},{"URL":"https:\/\/academic.oup.com\/restud\/article-pdf\/90\/2\/634\/49435181\/rdac027.pdf","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2023,11,21]],"date-time":"2023-11-21T04:44:29Z","timestamp":1700541869000},"score":1,"resource":{"primary":{"URL":"https:\/\/academic.oup.com\/restud\/article\/90\/2\/634\/6586315"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2022,6,8]]},"references-count":56,"journal-issue":{"issue":"2","published-online":{"date-parts":[[2022,6,8]]},"published-print":{"date-parts":[[2023,3,6]]}},"URL":"https:\/\/doi.org\/10.1093\/restud\/rdac027","relation":{},"ISSN":["0034-6527","1467-937X"],"issn-type":[{"value":"0034-6527","type":"print"},{"value":"1467-937X","type":"electronic"}],"subject":[],"published-other":{"date-parts":[[2023,3,1]]},"published":{"date-parts":[[2022,6,8]]}}}