Date Added: Jun 2010
In this appendix, the authors present the details of the extended model with debt in the paper "Transitional Dynamics of Dividend and Capital Gains Tax Cuts." Section 1 presents the extended model and results. Section 2 presents the numerical algorithm to solve this model. Section 3 presents an additional figure for the simulation conducted in Section 3 of the original paper. They extend the baseline model to incorporate debt financing. To keep the model tractable, they consider risk-free debt and ignore the issue of default. Debt has a tax advantage in that interest payments are tax deductible.