Taxation and the External Wealth of Nations: Evidence from Bilateral Portfolio Holdings

Harry Huizinga, Maximilian Todtenhaupt, Johannes Voget and Wolf Wagner

No 14096, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines the impact of capital income taxation on the composition of foreign portfolio investment. Studying bilateral portfolio positions among a sample of 37 countries over the period 2001-2015, we find that capital gains and dividend taxation reduce the share of equities in foreign investments, while interest taxation increases this share. The results suggest that domestic capital income taxation affects the worldwide asset allocation of domestic investors. The estimated tax sensitivities imply a significant increase in country’s external wealth following a tax policy change that stimulates investors to hold higher-yielding equity investments.

Keywords: Asset allocation; Capital income taxation; Foreign portfolio investment (search for similar items in EconPapers)
JEL-codes: G11 H24 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-acc and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP14096 (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:
Journal Article: Taxation and the external wealth of nations: Evidence from bilateral portfolio holdings (2022)
Working Paper: Taxation and the External Wealth of Nations: Evidence from Bilateral Portfolio Holdings (2019)
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:14096

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14096

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 ().