The dilemma of international capital tax competition in the presence of public capital and endogenous growth

Stauvermann, Peter Josef & Kumar, Ronald Ravinesh (2015) The dilemma of international capital tax competition in the presence of public capital and endogenous growth. Annals of Economics and Finance, 16(2), pp. 255-272.

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Abstract

Using an OLG-model with endogenous growth and public capital we show, that an international capital tax competition leads to inefficiently low tax rates, and as a consequence to lower welfare levels and growth rates. Each national government has an incentive to reduce the capital income tax rates in its effort to ensure that this policy measure increases the domestic private capital stock, domestic income and domestic economic growth. This effort is justified as long as only one country applies this policy. However, if all countries follow this path then all of them will be made worse off in the long run.

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ID Code: 90078
Item Type: Journal Article
Refereed: Yes
Additional URLs:
ISSN: 1529-7373
Subjects: Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > Economic Theory (140100)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > Economic Theory (140100) > Macroeconomic Theory (140102)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > Economic Theory (140100) > Mathematical Economics (140103)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > Economic Theory (140100) > Microeconomic Theory (140104)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 2015 Peking University Press
Deposited On: 09 Nov 2015 04:18
Last Modified: 13 Nov 2015 03:23

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