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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/46530
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| Title: | | Interjurisdictional Spillovers, Decentralized Policymaking and the Elasticity of Capital Supply  |
| Authors: | | Eichner, Thomas Runkel, Marco |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper: Public Finance 3214 |
| Abstract: | | This paper points to the important role which the elasticity of aggregate capital supply with respect to the net rate of return to capital plays for the efficiency of policymaking in a decentralized economy with mobile capital and spillovers among jurisdictions. In accordance with previous studies, we show that under the assumption of a fixed capital supply (zero capital supply elasticity) the decentralized policy choice is optimal. If the capital supply elasticity is strictly positive, however, capital tax rates are inefficiently low in the decentralized equilibrium. |
| Subjects: | | decentralized policymaking spillovers capital supply elasticity |
| JEL: | | H23 H77 Q58 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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