Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263768 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9838
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
As an incentive to increase high-impact investment and boost growth, the German Federal Government is planning to introduce a targeted temporary super depreciation allowance to support much-needed green and digital transitions. Using a calibrated multi-sector DSGE model, we find that the temporary super deduction could trigger an uplift of 10 percentage points for green and digital capital spending, turbo-charging green growth ambitions. However, with the temporary measure set to end after two years, there is a risk that business investment could tail off at a crucial time, when post-COVID-19 recovery is levelling out. Thus, additional longer-term climate policies are needed to drive the green transition, facilitated by broad policy packages.
Subjects: 
climate economics
business taxation
firm investment
depreciation allowances
DSGE model
Germany
JEL: 
E22
E60
H25
Q54
Q58
Document Type: 
Working Paper
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