This paper analyses the implications of unemployment for fiscal competition and tax coordination among small open economies. Unemployment is modeled as resulting from wage bargaining. The analysis focuses on the effect of labour and capital tax coordination on welfare. We show that, while...

The success of the flat rate tax in Eastern Europe suggests that this concept could also be a model for the welfare states of Western Europe. The present paper uses a simulation model to analyse the effects of revenue neutral flat rate tax reforms on equity and efficiency for the case of...

Clemens Fuest discusses the employment and welfare effects of tax reforms in economies with equilibrium unemployment. He analyses the employment effects of tax progression, taking into account indiviual working time and human capital formation. He also compares labour and capital subsidies as...

The introduction of unemployment insurance is usually thought to increase welfare if workers are sufficiently risk averse. We analyse the effects of introducing mandatory unemployment insurance in the shirking model. Surprisingly, we find that introducing unemployment insurance reduces welfare...

It is well known that consumption-tax systems have several advantages over existing income-tax systems, such as greater administrative simplicity and intertemporal neutrality. Despite these advantages, proposals to introduce consumption taxes have only had very limited success. This paper...

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...