Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26429 
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dc.contributor.authorGomes, Pedroen
dc.contributor.authorPouget, Francoisen
dc.date.accessioned2008-09-11-
dc.date.accessioned2009-07-28T08:31:46Z-
dc.date.available2009-07-28T08:31:46Z-
dc.date.issued2008-
dc.identifier.urihttp://hdl.handle.net/10419/26429-
dc.description.abstractThe government's choices of the corporate tax rate and public investment are interdependent. In particular, they both respond positively to the other. Therefore, international tax competition not only drives corporate tax rates to lower levels but might also affect negatively the stock of public capital. We build a general equilibrium model that illustrates the relation between the two variables. We then add an element of international tax competition. Our simulations show that when international tax competition drives the statutory tax rate down from 45% to 30%, public investment is reduced by 0.4% of output at the steady state. The short run effect is three times higher. The second part of our study displays an empirical analysis that corroborates the main outcome of the model. We estimate two policy functions for 21 OECD countries and find that corporate tax rate and public investment are endogenous. More precisely, a decline of 15% in the corporate tax rate reduces public investment by 0.6% to 1.1% of GDP. We also find evidence that international competition operates on both policy tools.en
dc.language.isoengen
dc.publisher|aCenter for Economic Studies and ifo Institute (CESifo) |cMunichen
dc.relation.ispartofseries|aCESifo Working Paper |x2384en
dc.subject.jelH0en
dc.subject.jelH26en
dc.subject.jelH54en
dc.subject.ddc330en
dc.subject.keywordTax competitionen
dc.subject.keywordcorporate taxen
dc.subject.keywordpublic investmenten
dc.subject.keywordpublic capitalen
dc.subject.stwUnternehmensbesteuerungen
dc.subject.stwSteuerwettbewerben
dc.subject.stwÖffentliche Investitionen
dc.subject.stwInfrastrukturinvestitionen
dc.subject.stwAllgemeines Gleichgewichten
dc.subject.stwOECD-Staatenen
dc.titleCorporate tax competition and the decline of public investment-
dc.typeWorking Paperen
dc.identifier.ppn577509802en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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