Excessive Deficits and Research and Development capacity
Within the debate that involves the application of a tax discipline in the EMU, some authors have questioned the adequacy of the use of the same tax rules for all the different member states, appealing to a more temporary tax flexibility for the small and less developed countries. For such purposes, this paper develops a model of monetary union between two countries that differ in the degree of economic dimension; the exogenous levels of productivity directly related to the quality of the national institutions; the resources of technological knowledge and in the R+D capacity. The outcome obtained suggest that the appropriateness of including some exemptions to the European system of tax discipline, especially in terms of allocating more resources to R+D activities. Its application would affect the measures taken by the less developed countries, making them converge in a faster way.
Volume (Year): 68 (2008)
Issue (Month): 02 ()
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