NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Optimal Incentives to Domestic Investment in the Presence of Capital Flight

Assaf Razin, Efraim Sadka

NBER Working Paper No. 3080 (Also Reprint No. r1653)
Issued in August 1989
NBER Program(s):   ITI   PE   IFM

This paper develops a model of an open economy which employs distortionary taxes to finance public consumption, and with an access to the world capital market. The paper examines the efficiency of quantity restrictions on capital exports and the accompanying set of taxes. A distinction is made between a benchmark case where the government can fully tax foreign-source income and a more realistic case where the government cannot effectively tax foreign-source income.

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Document Object Identifier (DOI): 10.3386/w3080

Published:

  • "Efficient Investment Incentives in the Presence of Capital Flight," Journal of International Economics, Vol. 31, pp. 171-181, (1991).
  • Population Economics, Cambridge: MIT Press, 1995, chapter 9.

 
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