Liberalization of the International Capital Markets: Effects on Taxation, Cost of Public Funds and Income Redistribution

Assaf Razin and Efraim Sadka

No 275452, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: International-capital market integration has become a key policy issue in the prospective integration of Europe of 1992. In this context this paper provides a theoretical analysis of the effects of relaxing restrictions on the international flow of capital on the fiscal branch of government: the optimal provision of public goods, the structure of taxation and income redistribution policies. The major findings are: (a) income from investment abroad should be taxed at the same rate as income from domestic sources; (b) the cost of public funds falls and the supply of public goods rises if restrictions on international capital flows are relaxed; and (c) the amount of income redistributions, specifically the value of the demogrant, increases with the international-capital market liberalization.

Keywords: Financial Economics; Public Economics (search for similar items in EconPapers)
Pages: 29
Date: 1988-10
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https://ageconsearch.umn.edu/record/275452/files/TEL-AVIV-FSWP-129.pdf (application/pdf)

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Working Paper: LIBERALIZATION OF THE INTERNATIONAL CAPITAL MARKETS: EFFECTS ON TAXATION COST OF PUBLIC FUNDS AND INCOME REDISTRIBUTION (1988)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275452

DOI: 10.22004/ag.econ.275452

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