IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/3048.html
   My bibliography  Save this paper

Tax Policy and International Direct Investment

Author

Listed:
  • Joosung Jun

Abstract

The effects of taxes on direct investment capital outflows are investigated using a theoretical model which integrates the investment and financial decisions of the parent and subsidiary. The resulting marginal qs and costs of capital show that intrafirm investment allocation and tax neutrality results critically hinge on the marginal financing regime. By identifying a channel(s) through which a specific tax policy affects firm decisions, the model evaluates the combined effects of the home country tax system on direct investment. Out analysis suggests that while the 1986 U.S. Tax Reform Act may have an ambiguous effect on the overall level of capital outflows, it may induce more equipment investments to be undertaken abroad.

Suggested Citation

  • Joosung Jun, 1989. "Tax Policy and International Direct Investment," NBER Working Papers 3048, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3048
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w3048.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Jacob Frenkel & Assaf Razin & Steve Symansky, 1990. "International Spillovers of Taxation," NBER Chapters,in: Taxation in the Global Economy, pages 211-262 National Bureau of Economic Research, Inc.
    2. Auerbach, Alan J, 1983. "Taxation, Corporate Financial Policy and the Cost of Capital," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 905-940, September.
    3. James M. Poterba & Lawrence H. Summers, 1984. "The Economic Effects of Dividend Taxation," Working papers 343, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Michael J. Boskin & William G. Gale, 1987. "New Results on the Effects of Tax Policy on the International Location of Investment," NBER Chapters,in: The Effects of Taxation on Capital Accumulation, pages 201-222 National Bureau of Economic Research, Inc.
    5. Kolpits, George F, 1972. "Dividend Remittance Behavior Within the International Firm: A Cross-country Analysis," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 339-342, August.
    6. Joosung Jun, 1989. "U.S. Tax Policy and Direct Investment Abroad," NBER Working Papers 3049, National Bureau of Economic Research, Inc.
    7. Lawrence H. Goulder & John B. Shoven & John Whalley, 1983. "Domestic Tax Policy and the Foreign Sector: The Importance of Alternative Foreign Sector Formulations to Results from a General Equilibrium Tax Analysis Model," NBER Chapters,in: Behavioral Simulation Methods in Tax Policy Analysis, pages 333-368 National Bureau of Economic Research, Inc.
    8. Hartman, David G., 1985. "Tax policy and foreign direct investment," Journal of Public Economics, Elsevier, vol. 26(1), pages 107-121, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joosung Jun, 1990. "U.S. Tax Policy and Direct Investment Abroad," NBER Chapters,in: Taxation in the Global Economy, pages 55-78 National Bureau of Economic Research, Inc.
    2. Charles E. McLure, Jr., 1992. "The Political Economy of Tax Reforms and Their Implications for Interdependence: United States," NBER Chapters,in: The Political Economy of Tax Reform, NBER-EASE Volume 1, pages 97-116 National Bureau of Economic Research, Inc.
    3. Joosung Jun, 1994. "How taxation affects foreign direct investment (country - specific evidence)," Policy Research Working Paper Series 1307, The World Bank.
    4. Hans-Werner Sinn, 1991. "Taxation and the Cost of Capital: The "Old" View, the "New" View, and Another View," NBER Chapters,in: Tax Policy and the Economy, Volume 5, pages 25-54 National Bureau of Economic Research, Inc.
    5. Hans-Werner Sinn, 1990. "Taxation and the Birth of Foreign Subsidiaries," NBER Working Papers 3519, National Bureau of Economic Research, Inc.
    6. Yasushi Iwamoto & Akihisa Shibata, 1999. "Foreign Tax Credit and the Current Account," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(2), pages 131-148, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3048. 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: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.