Explaining the Variation in Empirical Estimates of Tax Elasticities of Foreign Direct Investment

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Explaining the Variation in Empirical Estimates of Tax Elasticities of Foreign Direct Investment

Author Info

Ruud A. de Mooij () (Faculty of Economics, Erasmus Universiteit Rotterdam)
Sjef Ederveen () (CPB Netherlands Bureau for Economic Policy Analysis)

Additional information is available for the following registered author(s):

Sjef Ederveen

Abstract

This study aims to explain the variation in empirical estimates in the literature on the elasticity of foreign direct investment with respect to company tax levels. To that end, we extend the meta analysis of De Mooij and Ederveen (2003) by considering an alternative classification of the literature, including new studies that have recently become available, and by paying more systematic attention to various control variables in primary studies. We find that the type of capital data and tax data exert a systematic impact on reported elasticities. Also controlling for openness and agglomeration tendencies appears to significantly affect the elasticity values.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 05-108/3.

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Date of creation: 06 Dec 2005
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Handle: RePEc:dgr:uvatin:20050108

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Find related papers by JEL classification:
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
F2 - International Economics - - International Factor Movements and International Business
H2 - Public Economics - - Taxation, Subsidies, and Revenue

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-01-24 (All new papers)
NEP-MAC-2006-01-24 (Macroeconomics)

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