Optimal inflation with corporate taxation and financial constraints
Sveriges Riksbank; Bank for International Settlements; European Central Bank; Université Libre de Bruxelles – SBSEM and ECARES, and CEPR
DSGE model with corporate taxation featuring deductibility of interest payments and investment expenditures, combined with collateral constraints à la Kiyotaki-Moore where firms use capital as collateral for borrowing
intermediate firms: use capital and labor with Cobb-Douglas technology, face credit constraints; final firms: buy intermediate inputs in competitive market, face Rotemberg price adjustment costs in sticky price version
Section 4, p.24
Baseline flexible price model with corporate taxation and collateral constraints
Authors describe as main quantitative result in Section 4