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Implicit tax co-ordination under repeated policy interactions

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Author Info

  • Marco CATENARO

    (European Central Bank)

  • Jean-Pierre VIDAL

    (European Central Bank)

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    Abstract

    In the context of a stylised gaine theoretical framework of capital tax competition, we show that when repeated policy interactions are associated to a systematic punishment of the deviating policymaker, a coordinated outcome can be the solution to the non cooperative tax game. This resuit suggests that explicit forms of policy coordination, such as a centralised tax authority, could in fact be largely unnecessary.

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    File URL: http://sites.uclouvain.be/econ/DP/REL/2006011.pdf
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    Bibliographic Info

    Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 2006011.

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    Length: 14
    Date of creation: 01 Mar 2006
    Date of revision:
    Handle: RePEc:ctl:louvre:2006011

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    Related research

    Keywords: Policy coordination; international fiscal issues;

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    References

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    1. Jeremy Edwards & Michael Keen, 1994. "Tax competition and Leviathon," IFS Working Papers W94/07, Institute for Fiscal Studies.
    2. Wildasin, David E., 1988. "Nash equilibria in models of fiscal competition," Journal of Public Economics, Elsevier, vol. 35(2), pages 229-240, March.
    3. Wilson, J.D., 1990. "Tax Competition With Interregional Differences In Factor Endowments," Working Papers 4, John Deutsch Institute for the Study of Economic Policy.
    4. Cardarelli, Roberto & Taugourdeau, Emmanuelle & Vidal, Jean-Pierre, 2002. " A Repeated Interactions Model of Tax Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(1), pages 19-38.
    5. Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 1-12, January.
    6. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
    7. Coates, Dennis, 1993. "Property tax competition in a repeated game," Regional Science and Urban Economics, Elsevier, vol. 23(1), pages 111-119, March.
    8. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, vol. 30(2), pages 167-181, September.
    9. Signe Krogstrup, 2003. "Are Capital Taxes Racing to the Bottom in the European Union?," IHEID Working Papers 01-2003, Economics Section, The Graduate Institute of International Studies.
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    Cited by:
    1. Yutao Han & Patrice Pieretti & Benteng Zou, 2013. "The Dynamics of the Location of Firms – A Revisit of Home-Attachment under Tax Competition," CREA Discussion Paper Series 13-15, Center for Research in Economic Analysis, University of Luxembourg.
    2. Wolfgang Eggert & Jun-ichi Itaya, 2011. "Tax Rate Harmonization, Renegotiation and Asymmetric Tax Competition for Profits with Repeated Interaction," CESifo Working Paper Series 3437, CESifo Group Munich.
    3. Jun-ichi Itaya & Makoto Okamuraz & Chikara Yamaguchix, 2009. "Partial tax coordination in a repeated game setting," Working Papers 2009/15, Institut d'Economia de Barcelona (IEB).
    4. Itaya, Jun-ichi & Okamura, Makoto & Yamaguchi, Chikara, 2008. "Are regional asymmetries detrimental to tax coordination in a repeated game setting?," Journal of Public Economics, Elsevier, vol. 92(12), pages 2403-2411, December.
    5. Yoichi Otsubo & Theoharry Grammatikos & Thorsten Lehnert, 2012. "Market Perceptions of US and European Policy Actions Around the Subprime Crisis," CREA Discussion Paper Series 12-14, Center for Research in Economic Analysis, University of Luxembourg.
    6. Jun-ichi Itaya & Makoto Okamura & Chikara Yamaguchi, 2010. "Partial Tax Coordination in a Repeated Game Setting," CESifo Working Paper Series 3127, CESifo Group Munich.

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