Now a closer look at

Now a closer look at θ, which is now the net INE in hands of shareholders after the income tax, is paid. The all targets for θ considers the retention at source on INE: Thus, expression (16) becomes: Considering tax rate as the same as the interest tax rate, then ω is equal to ω: Now expressions (14) and (18) have to be integrated for equity as dividends or INE as both can be distributed at the same time. Variable ɛ indicates the proportion of distributed profits as dividends while (1−ɛ) is the proportion of distributed profits that corresponds to INE. Thus, combining expressions (14) and (18) the company discount rate ρ for contribution of new capital from shareholders is: In sum, according to the King and Fullerton model, the cost of domestic capital in Brazil can be computed by expressions (8) and (9) in terms of the company discount rate, which, in turn, can be expressed as a function of the nominal interest rate according to expressions (10), (11) and (19), considering the source of finance debt, retained earnings or new shares, respectively. Table 1 summarizes the main expressions for Brazil.
Policy analysis In our analysis we consider two cases. The first case we suppose the absence of interest on net equity (INE) and so ɛ equals one. In the second case, we include INE assuming that ɛ is 50%. Our goal with this comparison is to have an intuition about the effect of INE on the cost of capital. The initial settings for some of the model parameters are: Initially, we can calculate the post-tax rate of return. Using expression (1), we find: See (Table 2) The statutory income tax rate on domestic interest was taken as 15%. As a general rule, the tax is retained at source. Because “s” is a high rate, at least relatively to the world standards after the crisis of 2008/2009, we could expect that most investors would buy Brazilian bonds rather than invest in the real economy. Moreover, high after-tax rates of return mean that required pre-tax rates can be even higher. Thus, the tax system may discourage direct investment in Brazil as long as amniote egg requires very high rates of return. Indeed, disregarding risks involved, a rational portfolio investor could give up a high bond rate in favor of real investment only if this could offer him/her an even higher rate of return, which can be hard to achieve. It should be noted, however, that this high after-tax rate of return is strongly influenced by the interest rate and in coming-up sections we simulate the effect of a lower/higher interest rate. Another point is that income tax incentives to foster investment can be of poor effectiveness with such a high after-tax rate of return.
Conclusion
Introduction Amariglio (1988) makes the following quotation, regarding Michel Foucault\'s work: “he writes on such a wide range of topics that his readers include people interested in literature, philosophy, history, sociology, politics, psychiatry, medicine, linguistics and semiotics.” (Lemert and Gillian apudAmariglio, 1988, 584). In the paper where Amariglio made this citation, he intended to provide us with “an economist\'s introduction to Foucault” and argued that he had decided to write the paper because he was utterly astonished by the fact that economists were neglecting Foucault, who had undoubtedly been one of the greatest thinkers of the twentieth century. Amariglio was actually drawing attention to the exclusion of economics in the fields mentioned by Lemert and Gillian. Perhaps, it would have been less of a surprise if Foucault had not included economics in his investigations. Nonetheless, economics was a focus of many of his writings. If we only consider what has been called “the archaeological phase” of his intellectual life, which will be the focus of this paper, the history and methodology of economics played a prominent role in one of his main works, . Even more emblematic is the fact that, in this book, Foucault worked on the emergence of political economy as a well-defined field of human knowledge to support the methodological approach to his studies concerning knowledge in general.