TY  - JOUR
AU  - Razin,Assaf
AU  - Sadka,Efraim
TI  - Integration of the International Capital Markets:  The Size of Government and Tax Coordination
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2863
PY  - 1990
Y2  - July 1990
UR  - http://www.nber.org/papers/w2863
L1  - http://www.nber.org/papers/w2863.pdf
N1  - Author contact info:
Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu

Efraim Sadka
Tel Aviv University
Eitan Berglas School of Economics
P.O.B. 39040
Ramat Aviv, Tel Aviv, 69978, ISRAEL
E-Mail: sadka@post.tau.ac.il
M1  - published as Assaf Razin, Efraim Sadka. "Integration of International Capital Markets: The Size of Government and Tax Coordination," in Assaf Razin and Joel Slemrod, editors, "Taxation in the Global Economy" University of Chicago Press, 1990 (1990)

AB  - International-capital market integration has become a key policy issue in the prospective integration of Europe of 1992. In this context this paper provides a theoretical analysis of the effects of relaxing restrictions on the international flow of capital on the fiscal branch of government: the optimal provision of public goods, the structure of taxation and income redistribution policies. Concerning issues of interdependent economies the paper analyzes the scope of tax coordination. The major findings are: (a) with no administrative barriers to capital flows the optimal policy is to tax income from investment abroad and from investments at home at the same time; (b) the cost of public funds falls and the supply of public goods rises if restrictions on international capital flows are relaxed: (c) the amount of income redistributions increases with the international capital market liberalization; (d) some minimal degree of tax coordination (such as origin-based or source-based tax schemes) is essential for the existence of an equilibrium in an integrated world economy.
ER  -