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Research Article

Investment Tax, Interest Rate Effect and The Entrepreneur’ Welfare: Theory and Numerical Calculation

Xia Zi-Xiang, Tian Cun-Zhi and Lu Ya-Qin
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Based on the external financing analysis framework of asymmetric information, the study establishes an general equilibrium model which contains the investment tax. Firstly, this study investigates that the investment tax are how to influence the size of the equilibrium interest rate and investigates the internal mechanism of the investment tax impact of capital market equilibrium interest rate. Secondly, this study studies the investment tax impact on the investment activities and welfare of different classes of entrepreneurs, proves that the entrepreneurs with very weak financial strength are not suffered any injury from a tight fiscal policy; the entrepreneurs whose financial strength is in the borderline of policy are given the greatest effects from the investment tax; the entrepreneurs with strong financial strength are affected both positive and negative, under certain conditions, the total effect is positive. Finally, this study comparative analyzes that the investment tax have different effects on the capital market of information asymmetric and the capital market of symmetric information.

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  How to cite this article:

Xia Zi-Xiang, Tian Cun-Zhi and Lu Ya-Qin, 2013. Investment Tax, Interest Rate Effect and The Entrepreneur’ Welfare: Theory and Numerical Calculation. Journal of Applied Sciences, 13: 3168-3174.

DOI: 10.3923/jas.2013.3168.3174


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