Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/61011 
Year of Publication: 
2012
Series/Report no.: 
CESifo Working Paper No. 3869
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This article describes the new ACE-type system implemented in Italy since 2012. We have first shown that this system reduces but does not eliminate the financial distortion due to interest deductibility. Using a dataset of Italian companies, we analyzed the impact of this relief on Italian firm capital structure. Despite the permanence of a tax advantage and its gradual implementation, the ACE relief is estimated to reduce significantly leverage. By decreasing default risk it is also expected to reduce systemic risk.
Subjects: 
ACE
business taxation
leverage
JEL: 
H25
H32
Document Type: 
Working Paper
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