Misleading conclusions can be drawn from studies of tax incidence that ignore the special features of developing countries. Incorporating these features can sometimes reverse the incidence pattern of taxes relative to what is often taken to be conventional wisdom. Even where patterns are not...

The tax sensitivity of foreign direct investment (FDI) has important policy implications. If FDI is not responsive to taxation, then it may be an appropriate target for taxation by the host country. This question is examined for Mexico by estimating the response of FDI from retained earnings and...