TY  - JOUR
AU  - Summers,Lawrence H.
TI  - Tax Policy and International Competitiveness
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2007
PY  - 1989
Y2  - October 1989
UR  - http://www.nber.org/papers/w2007
L1  - http://www.nber.org/papers/w2007.pdf
N1  - Author contact info:
Lawrence H. Summers
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9322
Fax: 617/495-0436
E-Mail: lhs@harvard.edu
M1  - published as Lawrence H. Summers. "Tax Policy and International Competitiveness," in Jacob A. Frenkel, ed., "International Aspects of Fiscal Policies" University of Chicago Press (1988)

AB  - This paper examines the interactions between tax policy, international capitol mobility, and international competitiveness. It demonstrates that tax policies which stimulate national investment without affecting national savings must inevitably lead to deterioration in a country's trade balance in the short and intermediate run. This conclusion, which contradicts a great deal of popular rhetoric highlights the importance of considering the macroeconomic as well as the microeconomic aspects of tax changes. Yore generally, the effects of tax policies depend critically on the extent of the international capital flows which they generate. The paper examines the issue of international capital mobility both theoretically and empirically. A variety of considerations suggest that while tax policies could generate large capital flows, governments pursue policies which tend to inhibit capital flows following tax changes. This makes the analysis of tax policies difficult.
ER  -