This paper analyses tax competition between a unionised and a non-unionised country for the location of an outside firm. We show that unionisation offers an extra incentive for the government to attract a foreign competitor to a concentrated domestic market, in order to affect the behaviour of...

An important puzzle in corporate taxation is that effective tax rates have fallen significantly while tax revenue has simultaneously risen in most countries. Moreover, the gross profitability of firms seems to be lower in high-tax countries, even though standard models of international...

We introduce financial frictions into a simple two sector model of international trade with heterogeneous agents and investigate the impact of differences in the strength of financial institutions and wealth inequality on trade flows, capital movements and entrepreneurial migration. Distinct...

We introduce financial frictions in a two sector model of international trade with heterogeneous agents. The level of specialization in the economy (economic development) depends on the quality of financial institutions. Underdeveloped financial markets prohibit an economy to specialize in...

This paper analyses the development of the ratio of corporate taxes to wage taxes using a simple political economy model with internationally mobile and immobile firms. Among other results, our model predicts that countries reduce their corporate tax rate, relative to the wage tax, either when...

Die globale Finanz- und Schuldenkrise hat zu hohen fiskalischen Kosten und erheblichen volkswirtschaftlichen Verwerfungen in Europa geführt. Zu instabil und komplex ist das international verwobene Finanzsystem, zu stark der finanzielle Nexus zwischen Staaten und Banken. Vor diesem Hintergrund...

Die europäischen Fiskalregeln - wichtiger Eckpfeiler der Wirtschafts- und Währungsunion - stehen in der Kritik und sollen reformiert werden. Einerseits wird argumentiert, dass sie zu restriktiv und angesichts eines steigenden öffentlichen Investitionsbedarfes nicht mehr zeitgemäß seien....

Does the reduction of the effective tax burden on corporations trigger foreign direct investment? We take the German tax reform of 2000 as a natural experiment in order to isolate the impact of corporate taxation on the investment of foreign-held affiliates in Germany. We do so by exploiting the...