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Press Release

Cleveland Fed researcher finds the initial impact of the 2017 tax reform on investment was small

The Tax Cuts and Jobs Act, introduced at the end of 2017, was a complex tax reform that included tax cuts for individuals and businesses. Business investment, however, grew more slowly after the tax reform than before it.

This Economic Commentary explains why the effect of the tax reform on investment may have been limited. Cleveland Fed researcher Filippo Occhino focuses on the tax-reform provisions that likely had the most important effect on investment: the tax cuts for corporations, individuals, and pass-through businesses; the increase in the first-year bonus depreciation; the scheduled amortization of R&D expenses; and the limit on interest deductibility.

Using a macroeconomic model to estimate the overall effect of the tax reform, Occhino finds that, because the different provisions worked in different directions, the initial impact of the tax reform on investment was small. The same model predicts that the tax reform will hold investment down in the medium term.

Read more: The Effect of the 2017 Tax Reform on Investment

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell,, 513.455.4479