Arbeitspapier
Productivity Gaps and Tax Policies Under Asymmetric Trade
We build a two-country model of endogenous growth to study the welfare effects of taxes on tradable primary inputs when countries engage in asymmetric trade. We obtain explicit links between persistent gaps in productivity growth and the incentives of resource exporting (importing) countries to subsidize (tax) domestic resource use. The exporters' incentive to subsidize hinges on slower productivity growth and is disconnected from the importers' incentive to tax resource inflows i.e., rent extraction. Moreover, faster productivity growth exacerbates the im- porters' incentive to tax, beyond the rent-extraction motive. In a strategic tax game, the only equilibrium is of Stackelberg type and features, for a wide range of parameter values, positive exporters' subsidies and importers' taxes at the same time. The model predictions concerning the impact of resource taxes on relative income shares are supported by empirical evidence.
- Language
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Englisch
- Bibliographic citation
-
Series: Economics Working Paper Series ; No. 16/239
- Classification
-
Wirtschaft
Economic Growth and Aggregate Productivity: General
Economic Growth of Open Economies
- Subject
-
Productivity Gaps
Endogenous Growth
International Trade
Tax Policy
Produktionspotenzial
Endogenes Wachstumsmodell
Außenhandel
Wohlfahrtsanalyse
Steuerpolitik
Zwei-Länder-Modell
- Event
-
Geistige Schöpfung
- (who)
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Bretschger, Lucas
Valente, Simone
- Event
-
Veröffentlichung
- (who)
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ETH Zurich, CER-ETH - Center of Economic Research
- (where)
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Zurich
- (when)
-
2016
- DOI
-
doi:10.3929/ethz-a-010611130
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Bretschger, Lucas
- Valente, Simone
- ETH Zurich, CER-ETH - Center of Economic Research
Time of origin
- 2016
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