Are Small countries leaders of the European tax competition ?
AbstractThe aim of this paper is to develop a better understanding of the literature dealing with strategic fiscal behaviours of small EU countries using estimations of tax reaction functions of competing national governments. Deriving a simple model of tax competition in a Nash and Stackelberg game, we use panel data and tools from spatial econometrics to examine the role of small countries in tax competition within the enlarged European Union. We find that interactions are stronger among smaller EU countries than between larges ones and rates set in small countries influence those in big countries. Finally, small countries located in the centre of the EU have more influence on tax policies choices of big countries than small countries located in the periphery of EU.
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Date of creation: Oct 2008
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Strategic interactions; tax behaviours; spatial econometrics; European Union; tax competition; small countries.;
Other versions of this item:
- Nicolas Chatelais & Mathilde Peyrat, 2008. "Are small countries leaders of the European tax competition ?," Documents de travail du Centre d'Economie de la Sorbonne bla08058, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- H - Public Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-28 (All new papers)
- NEP-PBE-2008-10-28 (Public Economics)
- NEP-URE-2008-10-28 (Urban & Real Estate Economics)
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- Michael Devereux & Simon Loretz, 2012. "What do we know about corporate tax competition?," Working Papers 1229, Oxford University Centre for Business Taxation.
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