How to treat tax basis of capital stock

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@jdebacker ya está trabajando en esto.

Desde el 11/8/2023.

  • #874 de @jdebacker — abierto

Evaluación

Dificultad
5/5
Tiempo estimado
Más de una semana
Aptitud para principiantes
12/100
Tipo de issue
Nueva funcionalidad
Claridad
Bastante claro
Estado de actividad
Estancado
Stack tecnológico
python
Área
backend

Línea de trabajo

The issue proposes changing the firm's profit function so the depreciation deduction uses the tax-basis aggregate capital K^tau instead of economic depreciation, and it gives the recursion for K^tau_{t+1} as a function of past capital stocks. The payload names no source files or tests, so locate the firm profit and capital law-of-motion code in OG-Core yourself. Linked pull request #874 is still open and already covers this work, so check it before starting. Done would mean the firm problem tracks K^tau dynamically and the model runs with it.

Escrito por el modelo de indexación a partir del texto del issue.

Descripción

In OG-USA right now, the firm's profit function is the following,

proffunc

where delta**tau in the last term is the tax basis of depreciation. It represents the fraction of economic depreciation that can be deducted from the firm's tax liability at the corporate income tax rate tau**corp. One issue with this is that when the tax basis depreciation is not equal to the economic depreciation tau**delta != delta then the tax basis of aggregate capital does not equal the actual aggregate capital K**tau != K. The last term in the profit equation should really be in terms of the tax basis of aggregate capital K**tau.

proffunctau

Making the tax basis of aggregate capital the component that determines the degree of depreciation deductibility makes K**tau the component that firms need to keep track of. Intuitively, the tax basis of aggregate capital is a function of the entire history of actual aggregate capital stocks. This is seen by combining the law of motion for the actual aggregate capital stock,

klom

with the law of motion for the tax basis of the aggregate capital stock.

ktaulom

Subtracting the actual law of motion equation from the tax basis law of motion equation and solving for K**tau_{t+1} gives the recursion that shows that the tax basis aggregate capital is a function of the history of actual capital stocks.

ktautp1

This renders the firm's problem dynamic. We need to update this in OG-USA.

Lenguaje dominante
Python
Estrellas
85
Forks
153
Merge medio
1 d 19 h
PR fusionados (30 d)
19

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Primeros pasos

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  3. Haz un fork del repositorio y trabaja en una rama.
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