The Effects of Inflation and Taxes on Growth Investments and Replacement Policies

MENACHEM BRENNER; ITZHAK VENEZIA

doi:10.1111/j.1540-6261.1983.tb03838.x

The Effects of Inflation and Taxes on Growth Investments and Replacement Policies

MENACHEM BRENNER^*, ITZHAK VENEZIA

^*Corresponding author for this work

BA Business Department

Research output: Contribution to journal › Article › peer-review

13 Scopus citations

Abstract

This paper investigates the effect of inflation and taxes on the optimal duration of investments. The main conclusion is that inflation does not always increase the duration of investments. For example, in the case of equipment with a short replacement cycle, increased inflation tends to decrease the duration of the cycle. Contrary to the common theoretical analysis, these results imply that inflation may increase some forms of capital investments. 1983 The American Finance Association

Original language	English
Pages (from-to)	1519-1528
Number of pages	10
Journal	Journal of Finance
Volume	38
Issue number	5
DOIs	https://doi.org/10.1111/j.1540-6261.1983.tb03838.x
State	Published - Dec 1983

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title = "The Effects of Inflation and Taxes on Growth Investments and Replacement Policies",

abstract = "This paper investigates the effect of inflation and taxes on the optimal duration of investments. The main conclusion is that inflation does not always increase the duration of investments. For example, in the case of equipment with a short replacement cycle, increased inflation tends to decrease the duration of the cycle. Contrary to the common theoretical analysis, these results imply that inflation may increase some forms of capital investments. 1983 The American Finance Association",

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The Effects of Inflation and Taxes on Growth Investments and Replacement Policies

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