Optimal Incentives to Domestic Investment in the Presence of Capital Flight
This paper develops a model of an open economy which employs distortionary taxes to finance public consumption, and with an access to the world capital market. The paper examines the efficiency of quantity restrictions on capital exports and the accompanying set of taxes. A distinction is made between a benchmark case where the government can fully tax foreign-source income and a more realistic case where the government cannot effectively tax foreign-source income.
|Date of creation:||Aug 1989|
|Date of revision:|
|Publication status:||published as "Efficient Investment Incentives in the Presence of Capital Flight," Journal of International Economics, Vol. 31, pp. 171-181, (1991).|
|Note:||ITI PE IFM|
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- Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
- Assaf Razin & Efraim Sadka, 1989. "Integration of the International Capital Markets: The Size of Government and Tax Coordination," NBER Working Papers 2863, National Bureau of Economic Research, Inc.
- Sadka, Efraim, 1977. "A Note on Producer Taxation and Public Production," Review of Economic Studies, Wiley Blackwell, vol. 44(2), pages 385-87, June.
- 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.
- Assaf Razin & Efraim Sadka, 1990. "Integration of International Capital Markets: The Size of Government and Tax Coordination," NBER Chapters, in: Taxation in the Global Economy, pages 331-356 National Bureau of Economic Research, Inc.
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