EconPapers    
Economics at your fingertips  
 

FDI Determination and Corporate Tax Competition in a Volatile World

Mauro Ghinamo, Paolo Panteghini () and Federico Revelli ()

Working Papers from University of Brescia, Department of Economics

Abstract: This paper investigates the role of economic and political voltility in the process of corporate tax rate determination. Based on a theoretical framework that allows for the ability of multinational firms to choose the optimal timing of foreign investment and to shift profits by transfer pricing, the paper provides an empirical analysis on a large panel data set of countries over the 1983-2003 period. First, a reduced-form dynamic equation of corporate tax rate determination is estimated by generalized method of moments (GMM), where a country's top statutory corporate tax rate depends on a number of measures of economic and political volatility. Our results support the hypothesis that economic volatility is associated with lower top statutory corporate tax rates, while our measures of political volatility have no significant impact on corporate taxation policy. In order to identify the channels through which volatility works, we estimate a structural model allowing for simultaneous determination of the corporate tax rate and the inflow of FDIs to a country, and we are able to show that economic volatility affects the corporate tax setting process through its impact on FDI inflows.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
http://www.unibs.it/on-line/dse/Home/Ricerca/Paper ... o/documento9160.html
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.unibs.it/on-line/dse/Home/Ricerca/Paperdeldipartimento/documento9160.html [302 Found]--> https://www.unibs.it/on-line/dse/Home/Ricerca/Paperdeldipartimento/documento9160.html)

Related works:
Journal Article: FDI determination and corporate tax competition in a volatile world (2010) Downloads
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:ubs:wpaper:0802

Access Statistics for this paper

More papers in Working Papers from University of Brescia, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matteo Galizzi ().

 
Page updated 2020-06-28
Handle: RePEc:ubs:wpaper:0802