EconPapers    
Economics at your fingertips  
 

Financial Globalization and the Welfare State

Assaf Razin () and Efraim Sadka

No 12998, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: There is strong evidence from the launch of the single financial market in Europe on the interactions among financial globalization, international tax competition, and the fading generosity of the welfare state. Financial globalization triggers a race-to-the bottom tax competition. The tax race generates an international re-allocation of capital that further chips away at the domestic tax base, and drives a downscaling of scope and size of redistribution. To understand the working of key mechanism which links financial globalization to redistribution policy, this paper develops a stripped-down model, where easing the country access to the world capital markets induces political-economy based policy changes that impact income inequality. We demonstrate in the paper the crucial role of the welfare state in guaranteeing that the gains from trade from financial globalization spread out to all.

Date: 2018-06
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12998 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12998

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=12998

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2019-07-06
Handle: RePEc:cpr:ceprdp:12998