CIRJE-F-490 "International and Intergenerational Aspects of Capital Income Taxation in an Endogenously Growing World Economy"
Author Name Iwamoto, Yasushi and Akihisa Shibata
Date April 2007
Full Paper PDF file
Remarks Forthcoming in Review of International Economics.

This paper discusses how capital income taxation affects economic growth and welfare in an endogenously growing world economy with perfect capital mobility and worldwide externalities. Worldwide ex-ternalities provide a mechanism for equalizing national growth rates even with different capital income tax rates. The welfare of future generations is more influenced by a change in the growth rate than by the international spillover effect which has been the primary concern of the previous studies. Moreover, our model finds intergenerational conflicts arising from the change in the growth rate caused by a change in the source tax rate of the foreign country.