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Journal Article
Why is the dividend yield so low?
The dividend yield on stocks has dropped sharply over the last decade. Is its drop a consequence of irrational exuberance? This Commentary assesses alternative explanations for the diminished dividend yield.
Working Paper
Why Has the Stock Market Risen So Much Since the US Presidential Election?
This paper looks at the evolution of U.S. stock prices from the time of the Presidential elections to the end of 2017. It concludes that a bit more than half of the increase in the aggregate U.S. stock prices from the presidential election to the end of 2017 can be attributed to higher actual and expected dividends. A general improvement in economic activity and a decrease in economic policy uncertainty around the world were the main factors behind the stock market increase. The prospect and the eventual passage of the corporate tax bill nevertheless played a role. And while part of the rise ...
Working Paper
Pricing and dividend policies in open credit cooperatives
This paper develops an integrated model of pricing and dividend policies in open credit cooperatives (those that do business with members and non-members on a non-discriminatory basis). We show that both the distribution of member preferences and the amount of non-member business the cooperative does influence its optimal pricing and dividend policies. For a fixed distribution of member preferences, the larger the fraction of business done by members, the smaller the optimal dividend and the larger the optimal pricing subsidy (hence, increasing demand). On the other hand, for a fixed fraction ...
Working Paper
Optimal taxation of capital income in a growth model with monopoly profits
An extension of the standard neoclassical growth model, demonstrating that the optimal steady-state tax on capital income can be positive, negative, or zero, depending on the level of monopoly profits and the degree to which profits can be taxed.
Journal Article
North Texas income dip may reflect decline in education
Working Paper
Capital taxation during the U.S. Great Depression
Previous studies quantifying the effects of increased capital taxation during the U.S. Great Depression find that its contribution is small, both in accounting for the downturn in the early 1930s and in accounting for the slow recovery after 1934. This paper confirms that the effects are small in the case of taxation of business profits, but finds large effects in the case of taxation of dividend income. Tax rates on dividends rose dramatically during the 1930s and, when fed into a general equilibrium model, imply significant declines in investment and equity values and nontrivial declines in ...
Report
The impact of tax law changes on bank dividend policy, sell-offs, organizational form, and industry structure
This paper investigates the effect at the bank and industry level of a 1996 tax law change allowing commercial banks to elect S-corporation status. By the end of 2007, roughly one in three commercial banks had either opted for or converted to the S-corporation form of organization. Our study analyzes the effect of this conversion on bank dividend payouts. It also examines the effect S-corporation status has on a community bank's likelihood of sell-off and measures a firm's sensitivity to tax rates based on its choice of organizational form. We document that dividend payouts increase ...
Speech
Dividend policy and capital retention: a systemic “first response”.
Presentation by Eric S. Rosengren, President and Chief Executive Officer, Federal Reserve Bank of Boston, for ?Rethinking Central Banking? Conference, Washington, D.C., October 10, 2010
Working Paper
The macroeconomics of firms' savings
The authors document that the U.S. non-financial corporate sector became a net lender in the 2000s, using aggregate and firm-level data. They develop a structural model with investment, debt, and equity. Debt is fiscally advantageous but subject to a no-default borrowing constraint. Equity allows the firm to suspend dividends when the cash flow is negative. Firms accumulate financial assets for precautionary reasons, yet value equity as partial insurance against shocks. The calibrated model replicates the prevalence of net savings in the period 2000-2007 and attributes the rise in corporate ...
Journal Article
Higher payout