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Taxes, Mobile Capital, and Economic Dynamics in a Globalising World

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Abstract

This contribution provides evidence for the hypothesis that trade increases growth through its curbing effect on capital taxes. The analysed trade-growth channel includes a negative impact of open- ness on corporate taxes and a negative effect of taxes on growth. The paper explores the two steps theoretically and empirically, taking into account the critical points of recent studies in this field. Estimations with panel data for a sample of 12 OECD countries in the period 1965-1999 confirm a significant and robust impact of trade on growth through corporate taxes.

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Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 05/43.

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Length: 23 pages
Date of creation: Sep 2005
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Handle: RePEc:eth:wpswif:05-43

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Keywords: Trade and Growth; Tax Competition; Capital Taxes and Mobility; OECD Countries;

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Cited by:
  1. Özlem Onaran & Valerie Boesch, 2014. "The effect of globalization on the distribution of taxes and social expenditures in Europe: do welfare state regimes matter?," Environment and Planning A, Pion Ltd, London, vol. 46(2), pages 373-397, February.
  2. Markus Leibrecht & Claudia Hochgatterer, 2012. "Tax Competition As A Cause Of Falling Corporate Income Tax Rates: A Survey Of Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 26(4), pages 616-648, 09.
  3. Gregor Schwerhoff & Ottmar Edenhofer, 2014. "The Globalization Paradox Revisited," CESifo Working Paper Series 4878, CESifo Group Munich.
  4. Adam, Antonis & Kammas, Pantelis & Lagou, Athina, 2011. "The effect of globalization on capital taxation: What have we learned after 20 years of empirical studies?," MPRA Paper 33382, University Library of Munich, Germany.

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