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The right-wing power of small countries

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  • Franto Ricka

    (EBRD)

Abstract

This paper investigates the political implications of tax competition between countries of different sizes. We show that smaller countries competing for internationally mobile capital would set lower tax rates than their larger counterparts when run by similar governments. Moreover, small-country governments are actually politically to the right of those in larger countries, adding a second reason for lower tax rates in the former. Then a higher number of small countries competing for capital with large countries not only decreases the large-country tax rates on capital, but also results in more right-wing governments being elected. Small countries thus have ”right-wing power”.

Suggested Citation

  • Franto Ricka, 2012. "The right-wing power of small countries," Working Papers 153, European Bank for Reconstruction and Development, Office of the Chief Economist.
  • Handle: RePEc:ebd:wpaper:153
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    References listed on IDEAS

    as
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    1. Small countries are more right wing
      by Economic Logician in Economic Logic on 2013-02-06 21:43:00

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    More about this item

    Keywords

    tax competition; government; elections;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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