Increased activity of multinational firms exposes national corporate tax bases to cross-country profit shifting, but also leads to rising profitability of the corporate sector. We incorporate these two effects of economic integration into a simple political economy model where the median voter...

This study develops theory and discusses implications of flexibility in income shifting for multinational corporations that have both profit- and loss-making affiliates. Our theoretical model shows that when multinationals do not have flexibility to adjust their income-shifting strategies within...

This study examines the flexibility of multinational firms to adjust their income-shifting strategies -- whether using transfer pricing or internal debt -- during the tax year to react to affiliates' operating losses. We develop the concept that under flexibility, multinationals can adjust their...