International tax competition with rising intangible capital and financial globalization

Vincenzo Quadrini and José-Víctor Ríos-Rull

Journal of Monetary Economics, 2024, vol. 141, issue C, 101-120

Abstract: The last three decades has witnessed: (a) a rise in the share of intangible capital, and (b) an increase in cross-country ownership of assets (financial globalization). We study the significance of these trends for international tax competition within a two-country model, where governments choose profit and income tax rates without committing to future policies and without international coordination. Higher share of intangible capital has led to lower profit taxes, while increased financial globalization higher profit taxation with the first effect being larger. The combined effects yield a 6% reduction in profit the tax rate and 0.55% gains in welfare (accounting for the transition).

Keywords: International tax competition; Intangible capital; Financial globalization; Time consistent policies (search for similar items in EconPapers)
JEL-codes: E61 F68 H25 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:141:y:2024:i:c:p:101-120

DOI: 10.1016/j.jmoneco.2023.10.013

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