Recent theoretical development in closed-economy macroeconomics are extended to open economies to investigate the dynamics of the current account of the balance of payments and the effects of fiscal policies.

In an open economy with international capital flows, there is an equivalence relation between income tax, consumption tax, international borrowing tax, and an external interest earning tax. This paper analyzes tax reform involving shifts between income and consumption taxes in this setting. It...

This paper highlights key macroeconomic issues related to VAT harmonization. A model is developed which emphasizes the effects of changes in the time profile of various taxes on international behavior. Dynamic simulations reveal that the macroeconomic and welfare implications of VAT...

A number of developing countries have run large and persistent current account deficits in both the late seventies/early eighties and in the early nineties, raising the issue of whether these persistent imbalances are sustainable. This paper puts forward a notion of current account...

A methodology for computing effective average tax rates on factor incomes and consumption using OECD data from national accounts and revenue statistics is described and applied to construct time series of tax rates for the group of seven largest industrialized countries. These tax rates are...

Identifying determinants of the output-inflation tradeoff has long been a key issue in business cycle research. We provide evidence that in countries with greater restrictions on capital mobility, a given reduction in the inflation rate is associated with a smaller loss in output. This result is...