 International spillover effects of sectoral tax differentiation in unionized economiesOxford Economic Papers, 2002, vol. 54, issue 2, 207-229 Abstract: Sectoral tax differentiation has in recent years appeared on the agenda in European policy discussions concerning unemployment. The member countries of the European Union are allowed to reduce the value added tax rates on goods and services that are particularly labour intensive and price elastic. This paper provides a theoretical analysis of the international repercussions of such policies. We develop a two-country and two-sector model with monopolistic competition in the goods market and wage bargaining in the labour market. Policy externalities operate through the endogenously determined terms of trade. We examine how national and supranational commodity tax policies affect sectoral and total employment and characterize optimal commodity taxes with and without international policy cooperation. Some rough estimates of the welfare gains from policy coordination are also presented, using a calibrated version of the model. Copyright 2002, Oxford University Press. Date: 2002 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:54:y:2002:i:2:p:207-229 Ordering information: This journal article can be ordered from Access Statistics for this article Oxford Economic Papers is currently edited by James Forder and Francis J. Teal More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.