Taxes and the global allocation of capital

David Backus; Espen Henriksen; Kjetil Storesletten

doi:10.1016/j.jmoneco.2007.11.008

Taxes and the global allocation of capital

David Backus, Espen Henriksen, Kjetil Storesletten

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19 Scopus citations

Abstract

Despite enormous growth in international capital flows, capital-output ratios continue to exhibit substantial heterogeneity across countries. We explore the possibility that taxes, particularly corporate taxes, are a significant source of this heterogeneity. The evidence is mixed. Tax rates computed from tax revenue are inversely correlated with capital-output ratios, as we might expect. However, effective tax rates constructed from official tax rates show little relation to capital-or to revenue-based tax measures. The stark difference between these two tax measures remains an open issue.

Original language	English (US)
Pages (from-to)	48-61
Number of pages	14
Journal	Journal of Monetary Economics
Volume	55
Issue number	1
DOIs	https://doi.org/10.1016/j.jmoneco.2007.11.008
State	Published - Jan 2008
Externally published	Yes

Bibliographical note

Funding Information:
This study is a project funded by the Research Fund of Cumhuriyet University. The authors thank Fatma Yalçin and Ömit Sengül, of the staff of the Mineralogy-Petrography and Geochemistry Laboratories of the Engineering Faculty of Cumhuriyet University, for their help during laboratory studies. We are grateful to Dr. Selim Inan for improving an earlier version of this paper.

Keywords

Capital
Capital-output ratio
International capital flows
Taxes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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Taxes and the global allocation of capital

Abstract

Bibliographical note

Keywords

UN SDGs

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