Corporate Taxation in Open Economies

Arbeitspapier

This paper analyzes the macroeconomic impact of corporate taxation. The analysis is conducted in a quantitative two-country model. In the first step, the paper describes the long-run effects of corporate taxation. A reduction in the corporate-income tax rate increases GDP, wages, consumption, investment, and business density. The trade balance is at the same time negatively affected. Firms headquartered in a country which lowers its corporate tax become internationally less active and instead focus more on their domestic market. In the second step, the paper presents adjustment dynamics that are induced by a corporate-tax reform. The dynamic response of the economy can substantially differ when comparing shorter and longer time horizons.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9942

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; International Policy Coordination and Transmission ; Business Taxes and Subsidies including sales and value-added (VAT)
• Subject: corporate taxation ; macroeconomy ; heterogeneous firms ; multinationals ; international spillovers

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Šauer, Radek
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/265977
• Last update: 10.03.2025, 11:41 AM CET