Integration of the International Capital Markets: The Size of Government and Tax Coordination
International-capital market integration has become a key policy issue in the prospective integration of Europe of 1992. In this context this paper provides a theoretical analysis of the effects of relaxing restrictions on the international flow of capital on the fiscal branch of government: the optimal provision of public goods, the structure of taxation and income redistribution policies. Concerning issues of interdependent economies the paper analyzes the scope of tax coordination. The major findings are: (a) with no administrative barriers to capital flows the optimal policy is to tax income from investment abroad and from investments at home at the same time; (b) the cost of public funds falls and the supply of public goods rises if restrictions on international capital flows are relaxed: (c) the amount of income redistributions increases with the international capital market liberalization; (d) some minimal degree of tax coordination (such as origin-based or source-based tax schemes) is essential for the existence of an equilibrium in an integrated world economy.
|Date of creation:||Feb 1989|
|Publication status:||published as "Integration of International Capital Markets: The Size of Government and Tax Coordination." From Taxation in the Global Economy, edited by Assaf Razin and Joel Slemrod, pp. 331-348. Chicago: The University of Chicago Press, 1990.|
|Note:||PE ITI IFM|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stiglitz, Joseph E., 1982.
"Utilitarianism and horizontal equity : The case for random taxation,"
Journal of Public Economics,
Elsevier, vol. 18(1), pages 1-33, June.
- Joseph E. Stiglitz, 1981. "Utilitarianism and Horizontal Equity: The Case for Random Taxation," NBER Working Papers 0694, National Bureau of Economic Research, Inc.
- Efraim Sadka, 1977. "A Note on Producer Taxation and Public Production," Review of Economic Studies, Oxford University Press, vol. 44(2), pages 385-387.
- Razin, Assaf & Svensson, Lars E. O., 1983. "The current account and the optimal government debt," Journal of International Money and Finance, Elsevier, vol. 2(2), pages 215-224, August.
- Balcer, Yves & Sadka, Efraim, 1982. "Horizontal equity, income taxation and self-selection with an application to income tax credits," Journal of Public Economics, Elsevier, vol. 19(3), pages 291-309, December.
- Dixit, Avinash, 1985. "Tax policy in open economies," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 6, pages 313-374 Elsevier.
- Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2863. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.