Tariff jumping foreign investment and capital taxation
AbstractThis paper reconsiders the welfare effects of "tariff jumping" direct investment if mobile capital is subjected to taxation. In contrast to the conventional wisdom, the receiving country may in this case gain from the incremental inflow of capital, as this diverts tax revenues from the rest of the world. In the case of perfect capital mobility, this possibility becomes a certainty. Our argument provides one rationale for a small country to levy a distorting tariff in a second best world in which capital taxes already exist.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Economics.
Volume (Year): 53 (2001)
Issue (Month): 1 (February)
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Web page: http://www.elsevier.com/locate/inca/505552
Other versions of this item:
- Vivek Dehejia & Alfons Weichenrieder, 2000. "Tariff Jumping Foreign Investment and Capital Taxation," CESifo Working Paper Series 260, CESifo Group Munich.
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