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International Tax Competition in the Global Economy

Author

Listed:
  • Korneychuk, Boris

    (National Research University Higher School of Economics)

Abstract

This study employs a Keynesian-type model of the global economy to investigate the impact of savings rate, openness, and population size on equilibrium tax rates and tax revenues in a world economy. Within the model, the marginal propensity to consume is represented by a matrix specifying each country’s income distribution. This study reveals that equilibrium tax rates are higher in countries with a higher rate of savings, greater level of openness, and smaller population size. If an infinitely large number of identical and highly integrated competing countries exist, then a system with indirect taxation has a lower equilibrium tax rate and higher tax revenues than a system with direct taxation. If a country with direct taxation and a country with indirect taxation compete, then the latter country has an advantage.

Suggested Citation

  • Korneychuk, Boris, 2017. "International Tax Competition in the Global Economy," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 32(4), pages 842-872.
    • Handle: RePEc:ris:integr:0740
    as

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    More about this item

    Keywords

    Tax Competition; Global Economy; Keynesian Model; Tax Policy;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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