Convergence in Growth Rates: A Quantitative Assessment of the Role of Capital Mobility and International Taxation: Discussion

Sussman, Oren (1994) Convergence in Growth Rates: A Quantitative Assessment of the Role of Capital Mobility and International Taxation: Discussion. In: Leiderman, Leonardo and Razin, Assaf, (eds.) Capital Mobility: The Impact on Consumption, Investment and Growth. Cambridge University Press. ISBN 978-0521454384

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Abstract

We provide an exploratory quantitive analysis of the role of capital mobility and international taxation in explaining the observed cross-country diversity in the long-run rates of growth of per capita and total incomes as well as the population growth rates. Corroborative evidence is found for the theoretical results on the convergence/divergence in long-term population, per capita and total income growth rates obtained in Razin and Yuen (1992). In particular, the data (and casual observation) show: (1) that population growth and per capita income growth are negatively correlated across countries; (2) that the total income growth rates are less variable than the per capita income growth rates across countries; and (3) that asymmetry in capital income tax rates, coupled with the residence principle of international income taxation, can be an important source of cross-country differences in per capita income growth. Our computer simulations indicate that although the effects of liberalizing capital flows on long-run growth may not be all that sizeable, capital mobility can magnify the growth effects of changes in capital income tax rates as a result of cross-border policy spillovers.

Item Type: Book Section
Keywords: Capital Mobility; Economic Growth; Human Capital Accumulation; International Taxation; Population Growth;
Subject(s): Finance
Centre: Faculty of Finance
Date Deposited: 27 Mar 2012 20:02
Last Modified: 23 Oct 2015 14:07
URI: http://eureka.sbs.ox.ac.uk/id/eprint/2950

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