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The Effects of Capital Income Taxation on International Competitiveness and Trade Flows

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  • Bovenberg, A Lans

Abstract

Using an intertemporal equilibrium model, this paper analyzes how lower source-based taxes on capital income impact trade performance and international competitiveness. It shows that, depending on import shares and intertemporal and intratemporal substitution elasticities, capital accumulation may induce changes in real interest rates and the terms of trade that stimulate domestic saving--even if financial capital is perfectly mobile internationally. Import shares appear important determinants of exchange-rate effects. Numerical simulations illustrate these results. Copyright 1989 by American Economic Association.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 79 (1989)
Issue (Month): 5 (December)
Pages: 1045-64

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Handle: RePEc:aea:aecrev:v:79:y:1989:i:5:p:1045-64

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Cited by:
  1. Devarajan, Shantayanan & Go, Delfin S., 1998. "The Simplest Dynamic General-Equilibrium Model of an Open Economy," Journal of Policy Modeling, Elsevier, vol. 20(6), pages 677-714, December.
  2. Jeffrey Frankel., 1991. "The Making of Exchange Rate Policy in the 1980s," Economics Working Papers 91-157, University of California at Berkeley.
  3. Jacob A. Frenkel & Assaf Razin & Steve Symansky, 1991. "International VAT Harmonization: Economic Effects," NBER Working Papers 3656, National Bureau of Economic Research, Inc.
  4. Philippe THALMANN & Lawrence H. GOULDER & François DELORME, 1994. "Assessing the International Spillover Effects of Capital Income Taxation," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9411, Université de Lausanne, Faculté des HEC, DEEP.
  5. A. Lans Bovenberg & Lawrence H. Goulder, 1989. "Promoting Investment under International Capital Mobility: An Intertemporal General Equilibrium Analysis," NBER Working Papers 3139, National Bureau of Economic Research, Inc.
  6. Fahey, Tony & Scott, Susan & FitzGerald, John, 2006. "Sports and Arts," Book Chapters, in: Morgenroth, Edgar (ed.), Ex-Ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013 Economic and Social Research Institute (ESRI).
  7. O'Connell, Philip J. & Russell, Helen & FitzGerald, John, 2006. "Human Resources," Book Chapters, in: Morgenroth, Edgar (ed.), Ex-Ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013 Economic and Social Research Institute (ESRI).
  8. Lih-Jau Wang, 1995. "Environmental capital flight and pollution tax," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(3), pages 273-286, April.
  9. Judd, Kenneth L., 1996. "Approximation, perturbation, and projection methods in economic analysis," Handbook of Computational Economics, in: H. M. Amman & D. A. Kendrick & J. Rust (ed.), Handbook of Computational Economics, edition 1, volume 1, chapter 12, pages 509-585 Elsevier.
  10. Fahey, Tony & Russell, Helen & FitzGerald, John, 2006. "Childcare," Book Chapters, in: Morgenroth, Edgar (ed.), Ex-Ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013 Economic and Social Research Institute (ESRI).
  11. Tate, Robert & Finlayson, Greg & MacWilliam, Leonard & Wiley, Miriam M. & Morgenroth, Edgar & FitzGerald, John, 2006. "Health," Book Chapters, in: Morgenroth, Edgar (ed.), Ex-Ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013 Economic and Social Research Institute (ESRI).
  12. Casper van Ewijk & Erik Canton & Paul Tang, 2004. "Ageing and international capital flows," CPB Document 43, CPB Netherlands Bureau for Economic Policy Analysis.
  13. Morgenroth, Edgar & FitzGerald, John (ed.), 2006. "Ex-ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013," Research Series, Economic and Social Research Institute (ESRI), number PRS59, September.
  14. Bettendorf, Leon, 1998. "Investment-Promoting Policies in the Presence of International Interactions," Journal of Policy Modeling, Elsevier, vol. 20(6), pages 715-740, December.
  15. Osang, Thomas & Pereira, Alfredo, 1997. "Foreign growth and domestic performance in a small open economy," Journal of International Economics, Elsevier, vol. 43(3-4), pages 499-512, November.

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