Competitive Tax Reforms in a Monetary Union with Endogenous Entry and Tradability

Stéphane Auray, Aurélien Eyquem and Xiaofei Ma

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Abstract: We quantify the effects of competitive tax reforms within a two-country monetary union model with endogenous entry and endogenous tradability. As expected, their effects on output , consumption, hours worked and the terms of trade are positive. Extensive margins provide additional transmission mechanisms that turn the response of foreign output from negative to positive and yields larger aggregate welfare gains compared to alternative models. These positive spillovers are due to the positive effect of the reform on variety creation in both countries and change our vision of this type of reform from beggar-thy-neighbor to prosper-thy-neighbor.

Keywords: Competitive tax reforms; endogenous tradability; endogenous varieties; monetary union; taxes; fiscal; devaluations (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01467205v1
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Citations: View citations in EconPapers (6)

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Journal Article: Competitive tax reforms in a monetary union with endogenous entry and tradability (2017)
Working Paper: Competitive Tax Reforms in a Monetary Union with Endogenous Entry and Tradability (2017)
Working Paper: Competitive tax reforms in a monetary union with endogenous entry and tradability (2017)
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