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Exports, Foreign Direct Investment and the Costs of Corporate Taxation

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  • Christian Keuschnigg

    (wiiw)

Abstract

This paper develops a model of a monopolistically competitive industry with extensive and intensive business investment and shows how these margins respond to changes in average and marginal corporate tax rates. Intensive investment refers to the size of a firm's capital stock. Extensive investment refers to the firm's production location and reflects the trade-off between exports and foreign direct investment as alternative modes of foreign market access. The paper derives comparative static effects of the corporate tax and shows how the cost of public funds depends on the measures of effective marginal and average tax rates and on the behavioral elasticities of extensive and intensive investment.

Suggested Citation

  • Christian Keuschnigg, 2007. "Exports, Foreign Direct Investment and the Costs of Corporate Taxation," FIW Working Paper series 005, FIW.
    • Handle: RePEc:wsr:wpaper:y:2007:i:005
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    References listed on IDEAS

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