Arbeitspapier

The Globalization Paradox Revisited

According to the Globalization Paradox, globalization limits the freedom of choice for national governments. Capital mobility in particular induces tax competition, thus putting downward pressure on capital taxes. However, while capital mobility introduces the inefficiency of tax competition, it makes the allocation of capital more efficient. Whether national welfare and tax-financed public good provision increase or decrease through capital mobility depends on country characteristics. These characteristics include the relative capital endowment, the availability of taxes on fixed factors such as land and the preference for the public good. We compare the two second best settings of a closed economy and an economy with capital mobility to show that the relative capital endowment determines whether the net effect of capital mobility is positive. Fixed factor taxes have the potential to improve welfare by defusing the globalization trilemma through a reduction in the need for capital taxation.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 4878

Klassifikation
Wirtschaft
Externalities
Taxation and Subsidies: Efficiency; Optimal Taxation
National Government Expenditures and Related Policies: General
State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
International Fiscal Issues; International Public Goods
Thema
capital mobility
globalization
interjurisdictional competition
public good provision

Ereignis
Geistige Schöpfung
(wer)
Schwerhoff, Gregor
Edenhofer, Ottmar
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2014

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Schwerhoff, Gregor
  • Edenhofer, Ottmar
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2014

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