We identify the net effect of foreign direct investment (FDI) on the host economy by separating positive productivity (TFP) effects of knowledge spillovers from negative effects of competition. We allow for foreigners selecting into productive firms and sectors. Using a new and unique...

A reduction in capital tax rates generates substantial dynamic responses within the framework of the standard neoclassical growth model. The short-run revenue loss after a tax cut is partly — or, depending on parameter values, even completely — offset by growth in the long-run, due to the...