Real Exchange Rate Changes

John Lorié

Chapter 6 in Taxes and Exchange Rates in the EU, 2006, pp 257-369 from Palgrave Macmillan

Abstract: Abstract In the previous chapters I discussed international liberalisation of financial capital in a perfect world (Chapters 2 and 3) and under tax distortions (Chapters 4 and 5). The perfect-world analysis delivered the result that international liberalisation contributes via optimal international allocation of physical capital to welfare of both countries and therefore of the world as a whole. In Chapter 4 a tax distortion was introduced by way of differences in company taxes between countries. This distortion jeopardizes the perfect-world result, even to the extent that the benefits of international liberalisation of financial capital become uncertain. This outcome represents the actual stance of the literature. Policy thinking regarding tax harmonisation in the EU is developing on this basis.

Keywords: Foreign Direct Investment; Foreign Firm; Financial Asset; European Monetary Union; Nominal Exchange Rate (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62570-9_6

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DOI: 10.1057/9780230625709_6

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