Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75764
Authors: 
de Mooij, Ruud A.
Ederveen, Sjef
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper 588
Abstract: 
This paper reviews the empirical literature on the impact of company taxes on the allocation of foreign direct investment. We make the outcomes of 25 empirical studies comparable by computing the tax rate elasticity under a uniform definition. The mean value of the tax rate elasticity in the literature is around -3.3, i.e. a 1%-point reduction in the host-country tax rate raises foreign direct investment in that country by 3.3%. There exists substantial variation across studies, however. By performing a meta analysis, the paper aims to explain this variation by the differences in characteristics of the underlying studies. Systematic differences between studies are found with respect to the type of foreign capital data used, and the type of tax rates adopted. We find no systematic differences in the responsiveness of investors from tax credit countries and tax exemption countries.
JEL: 
F21
H25
Document Type: 
Working Paper

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