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Taxes, mobile capital, and economic dynamics in a globalizing world

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  • Bretschger, Lucas

Abstract

This contribution provides evidence for the hypothesis that trade increases growth through its curbing effect on capital taxes. The analyzed trade-growth channel includes a negative impact of openness on corporate taxes and a negative effect of taxes on growth. The paper explores the two steps theoretically and empirically, taking into account the different theories and estimation problems involved. Simultaneous 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.

Suggested Citation

  • Bretschger, Lucas, 2010. "Taxes, mobile capital, and economic dynamics in a globalizing world," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 594-605, June.
  • Handle: RePEc:eee:jmacro:v:32:y:2010:i:2:p:594-605
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    Cited by:

    1. Ãzlem 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, vol. 26(4), pages 616-648, September.
    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, 2013. "The effect of globalization on capital taxation: What have we learned after 20years of empirical studies?," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 199-209.
    5. Rangan Gupta & Lardo Stander & Andrea Vaona, 2017. "Openness and Growth: Is the Relationship Non-Linear?," Working Papers 201703, University of Pretoria, Department of Economics.

    More about this item

    Keywords

    Trade and growth Tax competition Capital taxes and mobility OECD countries;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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