⁴We neglect tax depreciation because, as shown in HallJorgenson, it matters only insofar as it affects the cost of capital; since the investment tax credit has a more transparent and direct effect on the cost of capital, including tax depreciation would add complication without adding any fundamental insights to the analysis – in the perfect foresight framework analyzed here, any attempt to analyze the effects of changes in tax depreciation should be translatable into an equivalent modification to the ITC. See House and Shapiro (2008) for elaboration.