Details
| Originalsprache | Englisch |
|---|---|
| Seiten (von - bis) | 47-61 |
| Seitenumfang | 15 |
| Fachzeitschrift | Journal of public economics |
| Jahrgang | 168 |
| Frühes Online-Datum | 26 Okt. 2018 |
| Publikationsstatus | Veröffentlicht - Dez. 2018 |
| Extern publiziert | Ja |
Abstract
This paper explores the implications of high indebtedness for strategic tax setting when capital markets are integrated. When public borrowing is constrained due to sovereign default or by a binding fiscal rule, a rise in a country's initial debt level lowers investment in public infrastructure and makes tax setting more aggressive in that jurisdiction, while the opposite occurs elsewhere. On net a jurisdiction with higher initial debt becomes a less attractive location. Our analysis is inspired by fiscal responses in severely hit countries after the economic and financial crisis which are consistent with the theoretical predictions. We find a similar pattern on the sub-national level using administrative data from the universe of German municipalities.
ASJC Scopus Sachgebiete
- Volkswirtschaftslehre, Ökonometrie und Finanzen (insg.)
- Finanzwesen
- Volkswirtschaftslehre, Ökonometrie und Finanzen (insg.)
- Volkswirtschaftslehre und Ökonometrie
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in: Journal of public economics, Jahrgang 168, 12.2018, S. 47-61.
Publikation: Beitrag in Fachzeitschrift › Artikel › Forschung › Peer-Review
}
TY - JOUR
T1 - Fiscal competition and public debt
AU - Janeba, Eckhard
AU - Todtenhaupt, Maximilian
PY - 2018/12
Y1 - 2018/12
N2 - This paper explores the implications of high indebtedness for strategic tax setting when capital markets are integrated. When public borrowing is constrained due to sovereign default or by a binding fiscal rule, a rise in a country's initial debt level lowers investment in public infrastructure and makes tax setting more aggressive in that jurisdiction, while the opposite occurs elsewhere. On net a jurisdiction with higher initial debt becomes a less attractive location. Our analysis is inspired by fiscal responses in severely hit countries after the economic and financial crisis which are consistent with the theoretical predictions. We find a similar pattern on the sub-national level using administrative data from the universe of German municipalities.
AB - This paper explores the implications of high indebtedness for strategic tax setting when capital markets are integrated. When public borrowing is constrained due to sovereign default or by a binding fiscal rule, a rise in a country's initial debt level lowers investment in public infrastructure and makes tax setting more aggressive in that jurisdiction, while the opposite occurs elsewhere. On net a jurisdiction with higher initial debt becomes a less attractive location. Our analysis is inspired by fiscal responses in severely hit countries after the economic and financial crisis which are consistent with the theoretical predictions. We find a similar pattern on the sub-national level using administrative data from the universe of German municipalities.
KW - Asymmetric tax competition
KW - Business tax
KW - Inter-jurisdictional tax competition
KW - Sovereign debt
UR - http://www.scopus.com/inward/record.url?scp=85055317875&partnerID=8YFLogxK
U2 - 10.1016/j.jpubeco.2018.10.001
DO - 10.1016/j.jpubeco.2018.10.001
M3 - Article
AN - SCOPUS:85055317875
VL - 168
SP - 47
EP - 61
JO - Journal of public economics
JF - Journal of public economics
SN - 0047-2727
ER -