MANUFACTURING INVESTMENT AND TAXATION IN THE NORDIC COUNTRIES

The accumulation of fixed productive capital in the manufacturing industries of Denmark, Finland, Norway, and Sweden is analyzed for the period 1965-90. Particular attention is given to the effect of taxes on this process. The following conclusions appear fairly robust across countries: Cointegrating long-run relationships can be found within the framework of the neoclassical model. The error-correction estimations indicate that investment is relatively sensitive to economic shocks. Taxes do not seem to have had significant effects on either long-run capital levels or the timing of investment.