This study examines the effects of taxes on the real exchange rate through their marginal impacts on economic activity. We develop a model that shows that an increase in the capital interest tax rate leads to real domestic currency depreciation while an increase in wage or consumption tax rates...

The tax competition hypothesis is that market integration places downward pressure on capital taxes and social expenditures. The compensation hypothesis asserts that market integration results in increased social expenditures and higher tax burdens. Using panel data over 1980-2012 from 26 OECD...

Muth's (1961) rational expectations model of commodity markets implies that inventory carryover creates ARCH processes in prices. The model also indicates that the expected price variance is an explanatory variable in price regressions. Hypotheses were tested on price data of twenty commodities...

Few macroeconomic studies exist on the effects of taxes on international trade. Our hypothesis is that higher tax rates raise a country’s production costs, leading to a decrease in exports in the long run. With panel data for 25 OECD countries, we use average effective tax rates on...

Previous work on the effect of taxes on foreign direct investment (FDI) focused primarily on capital income taxes. We investigate the proposition that other forms of taxation may also deter FDI. We use tax ratios, i.e., average effective tax rates, on consumption, labor and capital income for a...

This study examines the impact of taxes on the real exchange rate through their marginal effects on economic activity. We hypothesize that an increase in the capital interest tax rate leads to real domestic currency depreciation while an increase in wage or consumption tax rates leads to a real...