International Resource Tax Policies Beyond Rent Extraction
AbstractWe study the incentives of selfish governments to tax tradable primary inputs un- der asymmetric trade. Using an empirically-consistent model of endogenous growth, we obtain explicit links between persistent gaps in productivity growth and the observed tendency of resource-exporting (importing) countries to subsidize (tax) domestic resource use. Assuming uncoordinated maximization of domestic welfare, national governments wish to deviate (i) from inefficient laissez-faire equilibria as well as (ii) from efficient equilibria in which domestic distortions are internalized. The incentive of resource-rich countries to subsidize hinges on slower productivity growth and is disconnected from the typical incentive of importers to tax resource inflows. i.e., rent extraction. The model predictions concerning the impact of resource taxes on relative income shares are supported by empirical evidence.
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Bibliographic InfoPaper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 13/185.
Length: 47 pages
Date of creation: Nov 2013
Date of revision:
Productivity Growth; Exhaustible Resources; International Trade.;
Other versions of this item:
- Simone Valente & Luca Bretschger, 2013. "International Resource Tax Policies Beyond Rent Extraction," Working Paper Series 15313, Department of Economics, Norwegian University of Science and Technology.
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-09 (All new papers)
- NEP-EFF-2013-11-09 (Efficiency & Productivity)
- NEP-ENV-2013-11-09 (Environmental Economics)
- NEP-FDG-2013-11-09 (Financial Development & Growth)
- NEP-PBE-2013-11-09 (Public Economics)
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