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Policy Commitment and the Welfare Gains from European Capital Market Liberalization

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Abstract:

One of the most heated debates in international political economy concerns the liberalization of capital markets. A central theme within this debate is the coordination of tax policy. It has been argued that given the fiscal policy autonomy of countries and the increase in the international mobility of capital, policy competition may lead to distortionary tax policies. The incentive to attract foreign capital and to prevent capital outflow may induce countries to shift the tax burden from more mobile to less mobile states. These trends have manifested themselves clearly in EU member states for two decades. In order to better understand these trends in Europe, this paper calibrates a two-country open-economy model to evaluate the quantitative impact of capital liberalization on European tax policy.
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Name: International Studies Association
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http://www.isanet.org


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MLA Citation:

Quadrini, Vincenzo. "Policy Commitment and the Welfare Gains from European Capital Market Liberalization" Paper presented at the annual meeting of the International Studies Association, Hilton Hawaiian Village, Honolulu, Hawaii, Mar 05, 2005 <Not Available>. 2009-05-25 <http://www.allacademic.com/meta/p70604_index.html>

APA Citation:

Quadrini, V. , 2005-03-05 "Policy Commitment and the Welfare Gains from European Capital Market Liberalization" Paper presented at the annual meeting of the International Studies Association, Hilton Hawaiian Village, Honolulu, Hawaii <Not Available>. 2009-05-25 from http://www.allacademic.com/meta/p70604_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: One of the most heated debates in international political economy concerns the liberalization of capital markets. A central theme within this debate is the coordination of tax policy. It has been argued that given the fiscal policy autonomy of countries and the increase in the international mobility of capital, policy competition may lead to distortionary tax policies. The incentive to attract foreign capital and to prevent capital outflow may induce countries to shift the tax burden from more mobile to less mobile states. These trends have manifested themselves clearly in EU member states for two decades. In order to better understand these trends in Europe, this paper calibrates a two-country open-economy model to evaluate the quantitative impact of capital liberalization on European tax policy.

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Associated Document Available Political Research Online
Associated Document Available International Studies Association


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