Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92592
Authors: 
Ono, Yoshiyasu
Shibata, Akihisa
Year of Publication: 
2006
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 649
Abstract: 
Unless free international lending/borrowing is allowed, domestic saving equals domestic investment and hence saving and investment taxes have the identical effect, as is the case in a closed-economy context. However, if it is allowed, households can accumulate foreign assets besides domestic capital and hence saving and investment are separated, causing the two taxes to have different effects. Using a two-sector growth model, we show that the two taxes generate completely different effects on industrial structure. The investment tax always shrinks the capital-intensive sector whereas the saving tax may well expand it.
Subjects: 
saving tax
investment tax
two-sector growth model
industrial structure
financial asset trade
JEL: 
F41
E62
Document Type: 
Working Paper

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