Convergence in Growth Rates: A Quantitative Assessment of the Role of Capital Mobility and International Taxation
AbstractWe provide an exploratory quantitive analysis of the role of capital mobility and international taxation in explaining the observed cross-country diversity in the long-run rates of growth of per capita and total incomes as well as the population growth rates. Corroborative evidence is found for the theoretical results on the convergence/divergence in long-term population, per capita and total income growth rates obtained in Razin and Yuen (1992). In particular, the data (and casual observation) show: (1) that population growth and per capita income growth are negatively correlated across countries; (2) that the total income growth rates are less variable than the per capita income growth rates across countries; and (3) that asymmetry in capital income tax rates, coupled with the residence principle of international income taxation, can be an important source of cross-country differences in per capita income growth. Our computer simulations indicate that although the effects of liberalizing capital flows on long-run growth may not be all that sizeable, capital mobility can magnify the growth effects of changes in capital income tax rates as a result of cross-border policy spillovers.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 794.
Date of creation: Jul 1993
Date of revision:
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Other versions of this item:
- Assaf Razin & Chi-Wa Yuen, 1993. "Convergence in Growth Rates: A Quantitative Assessment of the Role of Capital Mobility and International Taxation," NBER Working Papers 4336, National Bureau of Economic Research, Inc.
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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