Investment, Volume 2

Investment, Volume 2

Tax Policy and the Cost of Capital

By Dale W. Jorgenson





These studies of the cost of capital will inspire and guide policy-makers who share the goal of making the allocation of capital in a market economy more efficient.

Volume 2 is devoted to the cost of capital approach to tax policy. This approach has supplied an important intellectual impetus for reforms of capital income taxation in the United States and around the world. Widespread applications of the cost of capital and the closely related concept of the marginal effective tax rate are due to the fact that these concepts facilitate the representation of economically relevant features of complex tax statutes in a highly succinct form.


$70.00 X ISBN: 9780262100571 494 pp. | 6.3 in x 8.9 in


  • Dale Jorgenson... is preeminently the master of the territory between economics and statistics, where both have to be applied to the study of concrete problems. His prolonged exploration of the determinants of investment spending, whatever its ultimate lessons, will certainly long stand as one of the finest examples in the marriage of theory and practice in economics.

    John Bates Clark Medal citation by the American Economic Association


  • Dale Jorgenson has made monumental contributions to the economics of investment, the cost of capital, and tax policy. This volume, which contains many of these contributions, is outstanding and a must-read.

    Laurence J. Kotlikoff

    Professor of Economics, Boston University, and Research Associate, NBER

  • In the 1960s, Dale Jorgenson laid the foundation for the modern analysis of taxation and investment. Over the last three decades he has built elaborate general equilibrium models on this foundation, and provided important new estimates of how taxation affects investment and economic efficiency. This volume brings together his contributions—some classic, others contemporary—in an essential reference for any student of applied public finance.

    James M. Poterba

    Professor of Economics, MIT

  • The economic approach to tax policy analysis has undergone momentous changes in the last three decades. Dale Jorgenson has stood at the center of the debate. This book brings together, in one convenient volume, 13 important papers by Jorgenson and his colleagues.

    Charles L. Ballard

    Professor of Economics, Michigan State University

  • Like Capital Theory and Investment Behavior and Post War U.S. Economic Growth, Dale Jorgenson's Investment: Tax Policy and the Cost of Capital is a testament to a brilliant career devoted to applying serious economic theory and econometric methods to the analysis of real-world problems and policy issues. Jorgenson's work on tax policy and the cost of capital has been tremendously influential in the thinking of professional economists on tax policy, both in the United States and around the world. This volume is must-reading for anyone interested in the development, evolution, and current application of economic thinking on tax policy and the cost of capital.

    Michael J. Boskin

    Tully M. Friedman Professor of Economics and Senior Fellow, Hoover Institution, Stanford University; and former Chairman, Council of Economic Advisers

  • This is a tremendously useful volume. It brings together much of the path-breaking analysis of the cost of capital, investment behavior, and the effects of taxation on capital formation that underlies recent thinking on tax policy.

    Charles E. McLure, Jr.

    Senior Fellow, Hoover Institution, Stanford University, and former Deputy Assistant Secretary of the Treasury

  • Economists and other professionals interested in investment in general and tax policy in particular with be delighted to have available in one volume these papers by Dale Jorgenson and several of his collaborators. The book not only includes what are by now classics in the field but also makes conveniently available the more recent contributions of this prolific scholar. Their republication is particularly timely, in view of the current revival of interest in reorienting the U.S. tax system toward a consumption basis, with significant implications for the taxation of business investment.

    David F. Bradford

    Professor of Economics and Public Affairs, Woodrow Wilson School of Public and International Affairs, Princeton University

  • No economist has contributed more to the understanding of the impact of tax policy on capital formation than Dale Jorgenson. This collection of essays contains his essential works in this area, starting with the seminal 1967 paper with Robert Hall and including the highly influential work with Alan Auerback on effective tax rates. It also contains lesser known, but nonetheless important, papers and will be a valuable reference for those interested in tax policy.

    Charles Hulten

    Professor of Economics, University of Maryland


  • Recipient of the John Bates Clark Medal citation by the American Economic Association