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The Intangible Economy

Author

Listed:
  • Sauer, Radek

    (Central Bank of Ireland)

Abstract

The paper explores how a small low-tax economy is affected by foreign corporatetax shocks. To address this question, I develop a dynamic general-equilibrium model, in which multinational firms engage in both tangible and intangible FDI. Intangible assets arise from multinationals’ R&D activities. Each multinational decides whether to place its intangibles in the parent firm or in an overseas affiliate. The placement decision shapes the intra-firm trade in royalties and R&D services. The model reveals that corporate taxes can directly impact arm’s-length prices of multinational firms. I investigate territorial corporate taxation as well as worldwide taxation of intangible income.

Suggested Citation

  • Sauer, Radek, 2026. "The Intangible Economy," Research Technical Papers 10/RT/26, Central Bank of Ireland.
    • Handle: RePEc:cbi:wpaper:10/rt/26
    as

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    File URL: https://www.centralbank.ie/docs/default-source/publications/research-technical-papers/the-intangible-economy.pdf?sfvrsn=48f3761a_5
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    More about this item

    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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