Fiscal Competition in Space and Time: An Endogenous-Growth Approach
AbstractIs tax competition good for economic growth? The paper addresses this question by means of a simple model of endogenous growth. There are many small jurisdictions in a large federation and individual governments benevolently maximise the welfare of immobile residents. Investment is costly: Quadratic installation and de-installation costs limit the mobility of capital. The paper looks at optimal taxation and long-run growth. In particular, the effects of variations in the cost parameter on economic growth and taxation are considered. It is shown that balanced endogenous growth paths do not always exist and effects of changes in installation costs are ambiguous.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2048.
Date of creation: 2007
Date of revision:
Other versions of this item:
- Becker, Daniel Thomas & Rauscher, Michael, 2007. "Fiscal competition in space and time: An endogenous-growth approach," Thuenen-Series of Applied Economic Theory 74, University of Rostock, Institute of Economics.
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- O00 - Economic Development, Technological Change, and Growth - - General - - - General
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