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Title:Dynamic tax competition and public-sector modernisation PDF Logo
Authors:Becker, Daniel Thomas
Issue Date:2008
Series/Report no.:Thünen-Series of Applied Economic Theory 56
Abstract:This paper addresses the question whether increased mobility of capital enhances public-sector modernisation. Public-sector modernisation is modelled as the accumulation of knowledge (or another accumulated production factor) that serves as an input in the government's production of a consumption good. The public-sector provides a direct transfer to households. The tax competition model in the background is a dynamic model in which capital flight induced by taxation is a process that takes time. The speed with which firms can relocate capital to other jurisdictions is taken as a measure of the degree of capital mobility. The main result of the paper is a contradiction of the idea that the competitive pressure caused by increased capital mobility enhances public sector modernisation.
Subjects:public-sector modernisation
dynamic tax competition
imperfect capital mobility
Document Type:Working Paper
Appears in Collections:Thünen Series of Applied Economic Theory, Universität Rostock

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