THE MACROECONOMIC EFFECTS OF CORPORATE SOCIAL RESPONSIBILITY

This paper develops a dynamic general equilibrium model to analyze the macroeconomic and welfare effects of corporate social responsibility (CSR). Analytically, this paper shows that the effects of CSR on consumption, corporate value, and social welfare are ambiguous. The calibration results show th...

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Bibliographic Details
Published inAcademia economic papers Vol. 49; no. 1; pp. 121 - 162
Main Author Wang, Wei-Neng
Format Journal Article
LanguageChinese
Published Taipei Institute of Economics, Academia Sinica 01.03.2021
Subjects
Economic theory
Economics
Expenditures
Macroeconomics
Social responsibility
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Summary:This paper develops a dynamic general equilibrium model to analyze the macroeconomic and welfare effects of corporate social responsibility (CSR). Analytically, this paper shows that the effects of CSR on consumption, corporate value, and social welfare are ambiguous. The calibration results show that the steady-state corporate value and social welfare exhibit inverted U-shaped relationships with CSR. Moreover, an increase in CSR can result in a double dividend in terms of enhancing both corporate value and social welfare, provided that the status quo CSR expenditure is moderate. Also, the corporate-valuemaximizing CSR expenditure is lower than the welfare-maximizing CSR expenditure. From a policy implication's point of view, this paper demonstrates that although an increase in the tax-deductible ratio of CSR expenditure can improve social welfare, it will also distance the state from a welfare-maximizing scenario.
ISSN:1018-161X
1810-4851