This paper analyzes the marginal source of funds for foreign investment using both aggregate and micro data on the intrafirm transactions of U.S. international firms. Tax arbitrage regarding the form and timing of transactions, combined with risks involved with foreign operations and the desire...

The evidence presented in this study confirms that tax-induced changes in the profitability of investment have had a powerful effect on the share of GNP devoted to nonresidential fixed investment. More specifically, we have reestimated two models of aggregate investment initially presented in...

Investors can achieve international diversification in their portfolios not only through purchasing foreign equity directly but also through investing in domestic firms which then invest abroad. Yet these alternative approaches are taxed very differently. A number of countries have also imposed...

The effects of taxes on direct investment capital outflows are investigated using a theoretical model which integrates the investment and financial decisions of the parent and subsidiary. The resulting marginal qs and costs of capital show that intrafirm investment allocation and tax neutrality...

The human capital construct is deep in the bones of economics and finds reference by many classical economists, even if they did not use the phrase. The term “human capital,” seldom mentioned in economics before the 1950s, increased starting in the 1960s and blossomed in the 1990s. The...