TY  - JOUR
AU  - Turnovsky,Stephen J.
AU  - Bianconi,Marcelo
TI  - The International Transmission of Tax Policies in a Dynamic World Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4086
PY  - 1993
Y2  - June 1993
UR  - http://www.nber.org/papers/w4086
L1  - http://www.nber.org/papers/w4086.pdf
N1  - Author contact info:
Stephen Turnovsky
Department of Economics
301 Savery Hall; Mail Stop DK 30
University of Washington
Seattle, WA   98195
Tel: 206-545-8028
E-Mail: sturn@u.washington.edu

Marcelo Bianconi
Dept. of Economics
Tufts University
Medford, MA 02155
E-Mail: marcelo.bianconi@tufts.edu
AB  - This paper analyzes the international transmission of tax shocks in a two-country infinite-horizon representative agent framework. In analyzing such shocks, the viability of the underlying tax regimes, arising from the arbitrage conditions characterizing equilibrium in a perfect world capital market, is emphasized. Conditions for both short-run and long-run viability are derived, and the two polar regimes of source-based and residence-based taxation discussed. In general, we find the fanner more likely to satisfy the viability conditions, than the latter. With equity financing, the long-run viability of residence-based taxation is likely to require the harmonization of tax and/or dividend policy. The main features of the dynamic adjustment paths following a tax increase are characterized.
ER  -