Exports, Foreign Direct Investment and the Costs of Corporate Taxation

Christian Keuschnigg

University of St. Gallen Department of Economics working paper series 2006 from Department of Economics, University of St. Gallen

Abstract: Depending on the definition of the tax base, the statutory corporate tax rate implies rather different measures of effective average and marginal tax rates. This paper develops a model of a monopolistically competitive industry with extensive and intensive business investment and shows how these margins respond to changes in average and marginal corporate tax rates. Intensive investment refers to the size of a firm's capital stock. Extensive investment refers to the firm's production location and reflects the trade-off between exports and foreign direct investment as alternative modes of foreign market access. The paper derives comparative static effects of the corporate tax and shows how the cost of public funds depends on the elasticities of the extensive and intensive investment responses.

Keywords: Exports; foreign direct investment; corporate taxation; extensive and intensive investment; costs of public funds (search for similar items in EconPapers)
JEL-codes: D21 F23 H25 L11 L22 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2006-07
New Economics Papers: this item is included in nep-int and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Exports, foreign direct investment, and the costs of corporate taxation (2008)
Working Paper: Exports, Foreign Direct Investment and the Costs of Corporate Taxation (2007)
Working Paper: Exports, Foreign Direct Investment and the Costs of Corporate Taxation (2007)
Working Paper: Exports, Foreign Direct Investment and the Costs of Coporate Taxation (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:dp2006:2006-17

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