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Dirty Money Coming Home: Capital Flows into and out of Tax Havens

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  • Lukas Menkhoff
  • Jakob Miethe

Abstract

We use newly released bilateral locational banking statistics of the Bank for International Settlements to show the full circle of international tax evasion via tax havens. Surprisingly, white-washed money from tax havens is also withdrawn from banks in non-havens if an information treaty is signed between both countries. There are time lags and other economically plausible structures in these reactions. Interestingly, the effect of additional information-uponrequest treaties seems to fade out over time. By contrast, new treaties based on automatic information exchange again show bite; this puzzling evidence is best explained by dirty money changing its packaging.

Suggested Citation

  • Lukas Menkhoff & Jakob Miethe, 2017. "Dirty Money Coming Home: Capital Flows into and out of Tax Havens," Discussion Papers of DIW Berlin 1711, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1711
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    References listed on IDEAS

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    More about this item

    Keywords

    Tax evasion; international capital flows; international information exchange treaties; bank deposits;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls

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