Who benefits from international fiscal cooperation? The role of cross-country asymmetries

George Liontos and Apostolis Philippopoulos

The Journal of Economic Asymmetries, 2023, vol. 27, issue C

Abstract: Within a unified general equilibrium framework, we revisit the problem of international fiscal competition and cooperation when countries differ in some core economic fundamentals. We focus on cross-country differences in productivity, initial public debt and institutional quality. Solving for non-symmetric equilibria, both non-cooperative and cooperative, we show that international fiscal cooperation can create winners and losers even if it is superior to non-cooperation at aggregate level. In particular, our solutions imply that international cooperation hurts those countries with low productivity and poor institutional quality. By contrast, it benefits those countries with fragile public finances.

Keywords: Optimal taxation; International fiscal coordination; Non-symmetric countries (search for similar items in EconPapers)
JEL-codes: F2 F4 H2 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:27:y:2023:i:c:s1703494923000026

DOI: 10.1016/j.jeca.2023.e00290

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