foreign ownership and corporate income taxation an empirical evaluation abstract foreign ownership allows countries to effectively export part of their corporate tax burden hence countries with high foreign ownership are expected to impose relatively high corporate taxes the findings of this paper suggest that there indeed is an economically significant positive relationship between foreign ownership and tax burdens in europe already significant foreign ownership levels in europe offer an explanation for the absence of a race to the bottom in corporate tax levels

matching grants and ricardian equivalence this paper investigates the effectiveness of matching grants to correct for interjurisdictional spillovers in the light of bernheim general neutrality result indeed this result suggests that the usual argument that matching grants are needed to internalize the externality arising from the existence of interjuridictional spillovers is an artifact of the assumption that jurisdictions neglect the impact that their decisions have on the federal budget relaxing this assumption and using a classical model where the arbitrage resulting from labor mobility implies that redistribution has the properties of a public good we find that matching grants are relevant although somewhat less ective we also find that optimal matching rates are independent of the number of jurisdictions and their strategic variables contrarily to the case where jurisdictions ignore the impact of their decisions on the federal budget

dutch disease effect of oil rents on agriculture value added in middle east and north african mena countries abstract this paper investigates the effect of oil rents on agriculture value added in oil producing middle east and north african mena countries annual data from 1970 to 2011 panel cointegration tests by pedroni 1999 long ran panel causality tests by canning and pedroni 2008 and two step system gmm by blundell and bond 1998 are used in this study we find a negative relationship between oil rents and agriculture value added in the long run with a rather slow rate of short run adjustment of agriculture value added back to equilibrium after a boom in oil rents these results indicate that an oil sector boom is associated with a contraction in the agriculture sectors of the countries in the panel in the long run this is probably attributable to a resource movement effect from other economic sectors to the booming oil sector in these countries this serves as evidence of a dutch disease effect of an oil sector boom on agriculture in the mena countries in this study

remittances and the dutch disease abstract using data for el salvador and bayesian techniques we develop and estimate a two sector dynamic stochastic general equilibrium model to analyze the effects of remittances on emerging market economies we find that whether altruistically motivated or otherwise an increase in remittance flows leads to a decline in labor supply and an increase in consumption demand that is biased toward non tradables the higher non tradable prices serve as incentive for an expansion of that sector culminating in reallocation of labor away from the tradable sector a phenomenon known as the dutch disease quantitative results also indicate that remittances improve the welfare of households because they smooth income flows and increase consumption and leisure levels a bvar analysis provides results that are consistent with the dynamics of the model

factor mobility and fiscal policy in the eu policy issues and analytical approaches this paper outlines some of the implications of factor market integration for fiscal policy in the countries of the eu and for the eu itself it draws particular attention to the dynamic dimensions of factor market integration and identifies some of the many issues for further research on these topics the past century has seen dramatic growth in the role of the public sector in the countries of western europe both by extensive regulatory as well as fiscal interventions by far the most important reason for the growth of public spending has been the increase in the level of redistributive or social insurance activities of governments these include public pension systems and health care programs as well as a host of other policies tax policies also have the effect of redistributing income among different groups european economic integration including prospective enlargement of the eu contributes to the freer movement of factors of production such as labor and capital both within the eu and between the eu and neighboring regions integration of factor markets affects the distribution of income and factor movements depend on fiscal incentives affecting the benefits and costs of redistributive policies

absentee ownership of immobile factors and environmental policies in a federation this paper studies the effects of absentee ownership of immobile factors on environmental policy of a jurisdiction in a federation an increase in emissions in a jurisdiction increases factor incomes but part of the increased factor incomes goes to absentee owners while only the residents of the jurisdiction bear the full disutility in addition the increase in emissions in a jurisdiction attracts capital and decreases capital in other jurisdictions reducing the incomes that the residents of the jurisdiction earn from owning immobile factors in other jurisdictions absentee ownership thus reduces the marginal benefit of an increase in emissions while it leaves the marginal cost unaffected from the jurisdiction s perspective as a consequence absentee ownership makes environmental policy of a jurisdiction too stringent relative to the efficient level the paper also considers the effects of absentee ownership on environmental policy when goods trade is allowed

consumer information search revisited theory and empirical analysis a comprehensive theoretical framework for understanding consumers information search behavior is presented unlike previous research our model identifies not only what factors affect consumers search behavior but also how these factors interact with each other in particular the model emphasizes the effect of prior brand perceptions on the search process we argue that when consumers have brand specific prior distributions of utility the existence of relative uncertainty among brands is necessary for search to be useful thus we explain why product class involvement or low search costs may not be sufficient to induce large amounts of search activity and why there may be an inverted u shaped relationship between search activity and experience we test our theory on consumers search behavior for new automobiles using data collected contemporaneously with consumers actual decision process our data support our theory

the effects of mongolia s booming mining industry on its agricultural sector a test for dutch disease dutch disease occurs when currency strengthening associated with a booming sector of an economy crowds out a lagging trade dependent sector in this study a keynesian style model is specified to deduce hypotheses about how increased foreign direct investment fdi aimed at mongolia s mining sector affects its agricultural sector a key finding is that while econometric results suggest the increased fdi strengthened mongolia s currency its adverse effect on mongolia s trade sensitive agricultural sector is not sufficiently strong to cause the sector to decline although dutch disease was not detected the posited mechanism clearly is important specifically when currency strengthening is ignored the reduced form elasticity of agricultural value added with respect to fdi is 2 7 times larger than when currency strengthening is taken into account 0 103 vs 0 038 also fdi induced currency strengthening causes the keynesian multiplier y g to drop from 2 40 to 2 00 and the fdi multiplier y fdi to drop from 3 05 to 1 89

risky local tax bases risk pooling vs rent capture abstract when a jurisdiction s land or other fixed resources are owned by non residents its residents have an incentive to capture the non residents rents by imposing confiscatory taxes when different jurisdictions are subject to less than perfectly correlated risks such taxes destroy the benefits of risk pooling that cross ownership of property otherwise permits if jurisdictions must use property taxes i e taxes on both immobile land and mobile capital instead of taxes on land alone they will compete for mobile capital by keeping tax rates low if capital is sufficiently substitutable for immobile factors tax rates will be low enough to achieve greater effective diversification of risks and higher welfare

product and promotion adaptation in export ventures an empirical investigation while the desirability of marketing adaptation vs standardization has long been debated within both academic and business circles empirical studies investigating the conditions under which each strategy becomes appropriate have been rare this article provides a formal investigation of the correlates of product and promotion adaptation in export ventures a conceptual framework of product and promotion adaptation in export ventures is proposed to integrate the diverse perspectives on the issue of standardization versus adaptation the conceptual framework is further specified in a testable form and tested via data collected by a series of in depth personal interviews with export marketing managers the results support the contingency perspective recently emerging in the standardization literature and suggest that the degree of the various aspects of product adaptation i e upon and after entry and promotion adaptation i e positioning packaging labeling and promotional approach are significantly influenced by company product industry and export market characteristics however the profile of the correlates varies across the various aspects of product and promotion adaptation

capital income and profit taxation with foreign ownership of firms abstract this paper establishes optimal rules for capital income and profits taxation in the open economy with or without foreign ownership of domestic firms we show that if there are constraints on the feasibility of profits taxation both saving and investment taxes generally enter the optimal tax package if instead profits can be fully taxed then source based investment taxes vanish if domestic firms are in part owned by foreigners then source based investment taxes can be used to shift income away from these to domestic citizens and they may even be used to finance lump sum transfers to domestic residents

on the effects of barriers to international investment a simple model is presented in which it is costly for domestic investors to hold foreign assets the implications of the model for the composition of optimal portfolios at home and abroad are derived it is shown that all foreign assets with a beta larger than some beta plot on either one of two security market lines some foreign assets with a beta smaller than are not held by domestic investors even if their expected return is increased slightly while it is obviously not true that asset markets are completely segmented between countries there is evidence of barriers to international investment although reality seems to lie in that grey area between complete segmentation and no segmentation at all most international asset pricing models are concerned with the extreme case of no barriers to international investment no effort seems to have been made to study the effect on portfolio choice of such barriers which make it costly to hold foreign securities as opposed to domestic securities but which do not in general render international diversification so onerous that investors avoid foreign securities completely casual empiricism suggests that models without barriers to international investment should be suspect those models cannot explain why it appears that in every country investors on average hold more domestic securities than would be required if they held the world market portfolio 2 this paper constructs a model of international asset pricing in which there is a cost associated with holding either long or short risky foreign securities for the sake of simplicity in most of the paper we assume that while domestic investors face barriers to international investment foreign investors face no such barriers it turns out that nothing significant is lost with such an assumption the main conclusions of this paper for the case in which foreign investors face no barriers to international investment are 1 in the presence of barriers to international investment some risky foreign

strategic tax competition implications of national ownership abstract two jurisdictions compete to capture the rents of a large multinational enterprise mne which invests locally and which is partly owned by local investors the mne contributes to local welfare by tax payments and dividends and it has private information about the efficiency of the operations in the two localisations it is shown that the distortions in the mne s real investment portfolio are determined by a trade off between fiscal externalities and equity externalities and that investments in the case of strategic tax competition may be lower than in the co operative case ownership matters and we show how the firm may reduce its overall tax payments by influencing the distribution of owner shares between investors in the two countries

u s foreign direct investment in latin america and the caribbean a case of remittances and market size abstractthis article investigates the effect of remittances on u s foreign direct investment fdi flows to latin america and the caribbean lac it covers 26 countries for the period 1983 2010 the results show a positive and significant impact of remittances on u s fdi flows however this effect depends upon the level of gross domestic product gdp per capita of the host country on average the results show that increasing remittances by one standard deviation increases u s fdi flows by 0 44 percent a year also host country demand positively affects u s fdi flows which supports the market size hypothesis

the dutch disease a disease after all many third world oil producers are encountering serious problems in building up a diversified export base while west european oil and gas producers netherlands united kingdom are suffering a decline in their traded goods manufacturing sector induced by real wage pressures it is becoming increasingly clear that high but temporary oil revenues may be somewhat ora mixed blessing the quip of the economist notwithstanding the mechanism behind this unbalance is clear enough part of the oil revenues is spent on non traded goods which leads to a real appreciation i e a rise in the relative price of non traded goods in terms of traded goods this in turn draws resources out of the non oil traded sector into the non traded goods producing sector corden and neary 1982 van wijnbergen 1980 one may say that this is an efficient response to the increase in income from oil production the united kingdom mexico egypt simply should move into oil derived industries and non traded goods and forget about their manufacturing sector until oil reserves are exhausted however many developing countries are hesitant to take this advice after all the post world war ii success stories in economic development involve without exception countries that promoted their traded goods sector aggressively moreover it is a well established stylised fact that technological progress is faster in the traded non sheltered sectors of an economy than in the non traded sector balassa 1964 is an early reference considering the hypothesis that technological progress rather than taking place exogenously with the passage of time is a function of accumulated experience the concern of countries like egypt mexico or indonesia is much easier to understand since solow 1957 and denison 1962 it is known that capital accumulation explain only a small part of economic growth if most of economic growth is caused by learning by doing induced technologica

cointegration how short is the long run abstract when testing for cointegration and faced with short sample periods it is common for researchers to turn to more frequently sampled observations that is to move from annual to quarterly or monthly data in order to increase the number of observations we argue that such a gain in the degrees of freedom is more apparent than real essentially cointegration is a long run concept and hence requires long spans of data to give tests for cointegration much power rather than merely large numbers of observations using monte carlo simulations we demonstrate this for four popular tests for cointegration

the taxation of domestic and foreign banking abstract using bank level data for 80 countries in the 1988 1995 period this paper examines taxation of domestic and foreign owned banks the profitability of foreign banks is found to rise relatively little with their domestic tax burden perhaps reflecting the availability of foreign tax credits and profit shifting opportunities the paper also examines whether domestic and foreign banks pay different amounts of domestic tax taxes paid by foreign banks are shown to rise relatively little with the local statutory tax this evidence supports the hypothesis that foreign banks engage in relatively extensive profit shifting

mindscapes across landscapes archetypes of transnational and subnational culture most research on culture in international business either aggregates people within a country into a single homogeneous national culture or examines heterogeneity within countries based on exogenous criteria in this study we explore heterogeneity in cultural values within and across countries endogenously through the configurations of values people share in common we develop a theory of culture archetypes and use a novel methodology that identifies a small number of distinct configurations of values archetypes in our data these data come from the world values survey 2005 and schwartz s model of culture we identify four culture archetypes in japan usa and china and six in india the existence of transnational and subnational archetypes across the four countries suggests the need to recognize culture as a combination of universal etic as well as unique emic characteristics our approach also distinguishes between those individuals represented by our archetypes and those individuals who more closely resemble the average values of a country by unifying both archetypes and national averages within one theoretical and methodological schema we thus reconcile the conflicting perspectives in the field

the narrow moving band the dutch disease and the competitive consequences of mrs thatcher notes on trade in the presence of dynamic scale economies abstract this paper presents a model of trade in which comparative advantage instead of being determined by underlying attributes of countries evolves over time through learning by doing in this model arbitrary patterns of specialization once established tend to become entrenched over time the model sheds light on three widely held views that do not make sense in more conventional models first is the view that temporary protection of selected sectors can permanently alter the pattern of comparative advantage in the protecting country s favor second is the view that seemingly favorable developments such as the discovery of exportable natural resources may lead to a permanent loss of other sectors and reduce welfare in the long run third is the possibility that a temporary overvaluation of a currency due to tight money can lead to a permanent loss of competitiveness in some sectors

inflation employment and the dutch disease in oil exporting countries a short run disequilibrium analysis the author uses nontraded goods and labor shortages in the gulf countries the decline of the traded goods sector in oil producers dutch disease and the absence of employment benefits of higher oil revenues in latin american oil producers higher oil revenues can be likened to a transfer putting pressure on non oil traded nt goods prices and drawing resources out of the t sector the slope of the wage indexation line determines whether classical unemployment or repressed inflation results various policy measures are analyzed 3 references 8 figures

diagnosing measurement equivalence in cross national research many researchers have pointed out that it is necessary to ensure measurement equivalence in cross national comparative research three aspects of measurement equivalence translation metric and calibration equivalence are necessary to establish the cross national reliability and validity of items used to measure theoretical constructs this paper discusses these issues and proposes two recently developed empirical techniques multiple group lisrel and optimal scaling for use in diagnosing cross national measurement equivalence these techniques are illustrated by reanalysis of a pioneering u s and japanese study the two techniques yield convergent results indicating measurement equivalence for some but not all ordinal level items under consideration the findings demonstrate that the proposed methods are useful diagnostic tools for exploring measurement equivalence several suggestions for reducing the likelihood of problems with measurement equivalence and a number of methods for dealing with items where lack of equivalence persists are also discussed

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

are international deposits tax driven abstract this paper investigates the impact of tax policy on international depositing non bank international deposits are shown to be positively related to interest income taxes and to the presence of domestic bank interest reporting this suggests that international deposits are in part intended to facilitate tax evasion at present only part of international interest flow are covered by either non resident interest withholding taxes or international exchange of information this incomplete coverage may be a reason that these policies currently appear to have little impact on international depositing

the case for international tax co ordination reconsidered tax co ordination its desirability and redistributional implication in a world of high capital mobility governments may be tempted to undercut each other s capital income taxes to attract capital from abroad since such tax competition may have detrimental effects for all countries european policy makers have debated the introduction of a minimum capital income tax rate within the eu this paper develops an applied general equilibrium model to estimate the effects of such tax co ordination on resource allocation income distribution and social welfare the model allows for the concern of policy makers that a rise in capital taxes within the eu may cause a capital flight out of europe capital flight will indeed reduce the welfare gain from tax co ordination within western europe but a positive net gain will remain although it is likely to be well below 1 of gdp the gain from co ordination will be unevenly distributed across european countries due to differences in economic structures and in the social preference for redistribution moreover even if the median voter s gain from tax co ordination may be small the gains for the poorer sections of society may be quite large peter birch sorensen

the behavioural homogeneity evaluation framework multi level evaluations of consumer involvement in international segmentation this paper presents a generic strategic framework of alternative international marketing strategies and market segmentation based on intra and inter cultural behavioural homogeneity consumer involvement ci is proposed as a pivotal construct to capture behavioural homogeneity for the identification of market segments results from a five country study demonstrate how the strategic framework can be valuable in managerial decision making first there is evidence for the cultural invariance of the measurement of ci allowing a true comparison of inter and intra cultural behavioural homogeneity second ci influences purchase behaviour and its evaluation provides a rich source of information for responsive market segmentation finally a decomposition of behavioural variance suggests that national cultural environment and nationally transcendent variables explain differences in behaviour the behavioural homogeneity evaluation framework therefore suggests appropriate international marketing strategies providing practical guidance for implementing involvement contingent strategies 2007 academy of international business all rights reserved

altered states taxes and the location of foreign direct investment in america this paper compares the distribution between u s states of investment from countries that grant foreign tax credits with investment from all other countries the ability to apply foreign tax credits against home country tax liabilities reduces an investor s incentive to avoid high tax foreign locations state corporate tax rate differences of 1 percent are associated with differences of 9 11 percent between the investment shares of foreign tax credit investors and the investment shares of all others suggesting that state taxes significantly influence the pattern of foreign direct investment in the united states copyright 1996 by american economic association

dutch disease and the mitigation effect of migration evidence from canadian provinces this article evaluates whether immigration can mitigate the dutch disease effects associated with booms in natural resource sectors we derive predicted changes in the size of the non tradable sector from a small general equilibrium model a la obstfeld rogoff using data for canadian provinces we find evidence that aggregate immigration mitigates the increase in the size of the non tradable sector in booming regions the mitigation effect is due mostly to interprovincial migration and temporary foreign workers there is no evidence of such an effect for permanent international immigration interprovincial migration also results in a spreading effect of dutch disease from booming to non booming provinces

local deficits and local jobs can u s states stabilize their own economies abstract using a sample of the 48 mainland us states for the period 1973 2009 we study the ability of us states to expand their own state employment through the use of state deficit policies the analysis allows for the facts that us states are part of a wider monetary and economic union with free factor mobility across all states and that state residents and firms may purchase goods from neighboring states those purchases may generate economic spillovers across neighbors estimates suggest that states can increase their own state employment by increasing their own deficits there is evidence of spillovers to employment in neighboring states defined by common cyclical patterns among state economies for large states aggregate spillovers to its economic neighbors are approximately two thirds of the large state s job growth because of significant spillovers and possible incentives to free ride there is a potential case to actively coordinate i e centralize the management of stabilization policies finally the job effects of a temporary increase in state own deficits persist for at most one to two years and there is evidence of a negative impact on state jobs when these deficits are scheduled for repayment

a simple test of friedman s permanent income hypothesis friedman s permanent income hypothesis pih predicts that the income elasticity of consumption should be higher for households for which a large fraction of the variation of their income is permanent than for households facing more transitory variations in income we test this prediction using modern household data from the us consumer expenditure survey the results offer some support for the pih

the provision of local public goods and factors in the presence of firm and household mobility abstract this paper studies the efficiency properties of allocations when firms and households are mobile and when local governments provide local public goods and local public factors the analysis differentiates between immobile land owners and perfectly mobile workers and concludes that an efficient allocation is obtained if there is no outflow of land rents to absentee owners if rents flow out only local public goods are supplied in accordance with the samuelson rule the provision of local public factors is inefficiently low however and jurisdictions tax mobile firms and mobile households inefficiently high in order to restrict the outflow of rents an optimal intervention scheme is derived in this case we also analyze the distortions that result when the non availability of local head taxes makes it impossible to internalize crowding costs

human capital investment and globalization in extortionary states abstract this paper considers education investment and public education policy in closed and open economies with an extortionary government the extortionary government in a closed economy chooses an education policy in order to overcome a hold up problem of time consistent taxation similar to benevolent governments the two types of government differ in their education policies if highly productive labor is mobile extortionary governments incentives for a policy that stimulates higher private education efforts vanish instead they have incentives to prevent individuals from mobility increasing education investment tax competition therefore reduces hold up problems of time consistent extortionary taxation but introduces other distortions that reduce workers utility

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

ageing migration and endogenous public pensions abstract this paper analyses migration behaviour of mobile workers in reaction to population ageing we show that the conventional wisdom that a decrease in fertility will lead to a rise in wages and thus to an inflow of immigrants that mitigates the adverse effects of ageing on public pensions may not hold if labour is heterogeneous moreover we demonstrate that if public pensions are endogenous i e if ageing leads the elderly to successfully lobby for higher taxes it may take several generations before a steady state is reached and the initial migration flow may be opposite to the steady state migration

taxation of investment and savings in a world economy the equilibrium of capital and equilibrium market prices are derived for a world economy with a unified securities market mobile capital no uncertainty and varying tax rates on different sources of income in each country the paper then characterizes optimal tax rates for a small country in this setting focusing on the peculiar incentives created when the before tax rate of return differs among securities due to differences in their typical tax treatment copyright 1986 by american economic association

direct foreign ownership institutional investors and firm characteristics in this paper we characterize foreign ownership using a dataset of ownership and attributes of swedish rms the analysis reveals that foreigners show a preference for large rms rms paying low dividends and rms with large cash positions on their balance sheets when we further analyze the preference for large rms we nd that market liquidity and presence in international markets measured through export sales or listings on other exchanges seem to characterize foreign holdings better than rm size alone foreigners also tend to underweight rms with a dominant owner importantly we demonstrate that most of the features associated with foreign ownership are driven by the fact that foreign investors typically are mutual funds or other institutional investors hence we identify an institutional investor bias rather than a foreign investor bias finally using ownership data on a country level we conclude that the results are particularly strong among u s investors who comprise the largest institutions among foreign investors 2001 elsevier science s a all rights reserved jel classixcation g1 g15

the saving and investment nexus for china evidence from cointegration tests the saving and investment nexus as postulated by feldstein and horioka fh 1980 is revisited the saving investment correlation for china is estimated over the periods 1952 1998 and 1952 1994 the latter culminating in a period of fixed exchange rate regime amongst the key results it is found that saving and investment are correlated for china for both the period of the fixed exchange rate and the entire sample period with high saving investment correlation the results suggest that the chinese economy is in conformity with the fh hypothesis this is a valid outcome for in china capital mobility was fairly restricted over the 1952 1994 period as indicated by the relatively low foreign direct investment