Capital Income Taxation and Specialization Patterns: Investment Tax vs. Saving Tax
AbstractUnless free international lending/borrowing is allowed, domestic saving equals domestic investment and hence saving and investment taxes have the identical effect, as is the case in a closed-economy context. However, if it is allowed, households can accumulate foreign assets besides domestic capital and hence saving and investment are separated, causing the two taxes to have different effects. Using a two-sector growth model, we show that the two taxes generate completely different effects on industrial structure. The investment tax always shrinks the capital-intensive sector whereas the saving tax may well expand it.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0649.
Date of creation: Mar 2006
Date of revision:
Other versions of this item:
- Yoshiyasu Ono & Akihisa Shibata, 2006. "Capital Income Taxation and Specialization Patterns: Investment Tax vs. Saving Tax," KIER Working Papers 613, Kyoto University, Institute of Economic Research.
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chatterjee, Satyajit & Ravikumar, B., 1999.
"Minimum Consumption Requirements: Theoretical And Quantitative Implications For Growth And Distribution,"
Cambridge University Press, vol. 3(04), pages 482-505, December.
- Satyajit Chatterjee & B. Ravikumar & B. Ravikumar, 1997. "Minimum consumptions requirements: theoretical and quantitative implications for growth and distribution," Working Papers 97-15, Federal Reserve Bank of Philadelphia.
- Chatterjee, S. & Ravikumar, B., 1997. "Minimum Consumption Requirements: Theoretical and Quantitative Implications for Growth and Distribution," Working Papers 97-15, University of Iowa, Department of Economics.
- Jacob Frenkel & Assaf Razin & Efraim Sadka, 1991.
"International Taxation in an Integrated World,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262061430, January.
- Yasushi Iwamoto & Akihisa Shibata, 1999. "Foreign Tax Credit and the Current Account," International Tax and Public Finance, Springer, vol. 6(2), pages 131-148, May.
- A. Lans Bovenberg, 1992.
"Residence-and source-based taxation of capital income in an overlapping generations model,"
Journal of Economics,
Springer, vol. 56(3), pages 267-295, October.
- Bovenberg, A.L., 1992. "Residence- and source-based taxation of capital income in an overlapping generations model," Open Access publications from Tilburg University urn:nbn:nl:ui:12-152976, Tilburg University.
- Richard A. Brecher & Zhiqi Chen & Ehsan U. Choudhri, 1999.
"Absolute and Comparative Advantage, Reconsidered: The Pattern of International Trade with Optimal Saving,"
Carleton Economic Papers
00-02, Carleton University, Department of Economics, revised Nov 2002.
- Brecher, Richard A & Chen, Zhiqi & Choudhri, Ehsan U, 2002. "Absolute and Comparative Advantage, Reconsidered: The Pattern of International Trade with Optimal Saving," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 645-56, November.
- Fischer, Stanley & Frenkel, Jacob A., 1972. "Investment, the two-sector model and trade in debt and capital goods," Journal of International Economics, Elsevier, vol. 2(3), pages 211-233, August.
- Atkeson, Andrew & Ogaki, Masao, 1996.
"Wealth-varying intertemporal elasticities of substitution: Evidence from panel and aggregate data,"
Journal of Monetary Economics,
Elsevier, vol. 38(3), pages 507-534, December.
- Atkeson, A. & Ogaki, M., 1991. "Wealth-Varying Intertemporal Elasticities of Substitution Evidence from Panel and Aggregate Data," RCER Working Papers 303, University of Rochester - Center for Economic Research (RCER).
- Matsuyama, Kiminori, 1988. "Terms-of-Trade, Factor Intensities and the Current Account in a Life-Cycle Model," Review of Economic Studies, Wiley Blackwell, vol. 55(2), pages 247-62, April.
- Masao Ogaki & Andrew Atkeson, 1997. "Rate Of Time Preference, Intertemporal Elasticity Of Substitution, And Level Of Wealth," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 564-572, November.
- Lawrence H. Summers, 1988.
"Tax Policy and International Competitiveness,"
in: International Aspects of Fiscal Policies, pages 349-386
National Bureau of Economic Research, Inc.
- Steger, Thomas M., 2000. "Economic growth with subsistence consumption," Journal of Development Economics, Elsevier, vol. 62(2), pages 343-361, August.
- Manning, R, 1981. "Specialization and Dynamics in a Trade Model," The Economic Record, The Economic Society of Australia, vol. 57(158), pages 251-60, September.
- Becker, Robert A, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, MIT Press, vol. 95(2), pages 375-82, September.
- Stiglitz, Joseph E, 1970. "Factor Price Equalization in a Dynamic Economy," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 456-88, May-June.
- Easterly, William, 1991.
"Economic stagnation, fixed factors, and policy thresholds,"
Policy Research Working Paper Series
795, The World Bank.
- Easterly, William, 1994. "Economic stagnation, fixed factors, and policy thresholds," Journal of Monetary Economics, Elsevier, vol. 33(3), pages 525-557, June.
- Qiang Zhang & Masao Ogaki, 2004. "Decreasing Relative Risk Aversion, Risk Sharing, and the Permanent Income Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 421-430, October.
- Ikeda, Shinsuke & Ono, Yoshiyasu, 1992. "Macroeconomic Dynamics in a Multi-country Economy: A Dynamic Optimization Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 629-44, August.
- Mountford, A., 1996.
"Trade dynamics and endogenous growth: an overlapping generations analysis,"
Discussion Paper Series In Economics And Econometrics
9621, Economics Division, School of Social Sciences, University of Southampton.
- Mountford, Andrew, 1999. "Trade Dynamics and Endogenous Growth: An Overlapping-Generations Analysis," Economica, London School of Economics and Political Science, vol. 66(262), pages 209-24, May.
- Iwamoto, Yasushi & Shibata, Akihisa, 1991. "Capital income taxation and the current account in a small open economy," Journal of International Money and Finance, Elsevier, vol. 10(4), pages 480-496, December.
- Ogaki, Masao & Zhang, Qiang, 2001.
"Decreasing Relative Risk Aversion and Tests of Risk Sharing,"
Econometric Society, vol. 69(2), pages 515-26, March.
- Masao Ogaki & Qiang Zhang, 1998. "Decreasing Relative Risk Aversion and Tests of Risk Sharing," Working Papers 98-02, Ohio State University, Department of Economics.
- Masao Ogaki & Qiang Zhang, 2000. "Decreasing Relative Risk Aversion and Tests of Risk Sharing," Econometric Society World Congress 2000 Contributed Papers 1588, Econometric Society.
- Francesc Obiols-Homs & Carlos Urrutia, 2005.
"Transitional dynamics and the distribution of assets,"
Springer, vol. 25(2), pages 381-400, 02.
- Francesc Obiols-Homs & Carlos Urrutia, 2004. "Transitional Dynamics and the Distribution of Assets," Macroeconomics 0407020, EconWPA.
- Baxter, Marianne, 1992.
"Fiscal Policy, Specialization, and Trade in the Two-Sector Model: The Return of Ricardo?,"
Journal of Political Economy,
University of Chicago Press, vol. 100(4), pages 713-44, August.
- Marianne Baxter, 1991. "Fiscal policy, specialization, and trade in the two-sector model: the return of Ricardo?," Discussion Paper / Institute for Empirical Macroeconomics 56, Federal Reserve Bank of Minneapolis.
- Ihori, Toshihiro, 1991. "Capital Income Taxation in a World Economy: A Territorial System versus a Residence System," Economic Journal, Royal Economic Society, vol. 101(407), pages 958-65, July.
- Martin Feldstein & Charles Horioka, 1979.
"Domestic Savings and International Capital Flows,"
NBER Working Papers
0310, National Bureau of Economic Research, Inc.
- Bianconi, Marcelo, 1995. "Fiscal policy in a simple two-country dynamic model," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 395-419.
- Stephen J. Turnovsky, 1997. "International Macroeconomic Dynamics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262201119, January.
- repec:cup:macdyn:v:3:y:1999:i:4:p:482-505 is not listed on IDEAS
- Lejour, Arjan M. & Verbon, Harrie A. A., 1998. "Source-based versus residence-based capital income taxes in a dynamic model," European Journal of Political Economy, Elsevier, vol. 14(3), pages 529-541, August.
- Koichi Futagami & Akihiko Kaneko & Yoshiyasu Ono & Akihisa Shibata, 2008. "International Asset Trade, Capital Income Taxation, and Specialization Patterns," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 743-763, October.
- Zhiqi Chen, 1992. "Long-Run Equilibria in a Dynamic Heckscher-Ohlin Model," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 923-43, November.
- Yoshiyasu Ono & Akihisa Shibata, 2005. "Fiscal Spending, Relative-Price Dynamics, and Welfare in a World Economy," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 216-236, 05.
- Yoshiyasu Ono & Akihisa Shibata, 2006. "Long-run Specialization," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 1-15, 02.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fumiko Matsumoto).
If references are entirely missing, you can add them using this form.