President Obama will today announce that Austan Goolsbee will chair the White House’s Council of Economic Advisers. Goolsbee, a Chicagoan, will replace Christina Romer. From Lynn Sweet’s blog:
Goolsbee is staff director and chief economist on the President’s Economic Recovery Advisory Board and is also a member of the Council of Economic Advisers. Goolsbee joined the administration after being a top economic advisor to Obama’s presidential campaign.
Goolsbee is on leave as the Robert P. Gwinn Professor of Economics at the University of Chicago Booth School of Business.
Goolsbee has written on investment tax credits, now topical, including a piece in the February 1998 Quarterly Journal of Economics, “Investment Tax Incentives, Prices, and the Supply of Capital Goods.” Abstract:
Using data on the prices of capital goods, this paper shows that much of the benefit of investment tax incentives does not go to investing firms but rather to capital suppliers through higher prices. A 10 percent investment tax credit increases equipment prices 3.5±7.0 percent. This lasts several years and is largest for assets with large order backlogs or low import competition. Capital goods workers’ wages rise, too. Instrumental variables estimates of the short-run supply elasticity are around 1 and can explain the traditionally small estimates of investment demand elasticities. In absolute value, the demand elasticity implied here exceeds 1. (continue reading…)