Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/201890 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7664
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
In this article we use a stochastic model with one representative firm to study business tax policy under default risk. We will show that, for a given tax rate, the government has an incentive to reduce (increase) financial instability and default costs if its objective function is welfare (tax revenue).
Subjects: 
capital structure
default risk
business taxation and welfare
JEL: 
H25
G33
G38
Document Type: 
Working Paper
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