Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/128324 
Authors: 
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper No. 5627
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
I analyze the dynamic effects of tax competition on public budget deficits. I find that stronger tax competition leads to a fiscal deficit bias at the early stages of financial liberalization. When countries differ in terms of capital mobility, further liberalization leads to external imbalances and diverging fiscal deficits while corporate tax rates converge. Consistent with theory, I find that stronger tax competition increases deficits in a sample of OECD countries, controlling for tax revenues and other standard determinants of fiscal deficits.
Subjects: 
international tax competition
political economy
deficit bias
redistribution
JEL: 
E62
F62
Document Type: 
Working Paper
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