Optimal Incentives to Domestic Investment in the Presence of Capital Flight

Journal Issue

Volume/Issue:: 1989/79
Series:: IMF Working Papers
Author(s):: International Monetary Fund
Publisher:: INTERNATIONAL MONETARY FUND
Published Date:: September 1989
DOI:: http://dx.doi.org/10.5089/9781451955682.001
ISBN:: 9781451955682
ISSN:: 1018-5941
Page:: 22

This paper develops a model of an open economy which employs distortionary taxes to finance public consumption, and with an access to the world capital market. The paper examines the efficiency of quantity restrictions on capital exports and the accompanying set of taxes. A distinction is made between a benchmark case where the government can fully tax foreign-source income and a more realistic case where the government cannot effectively tax foreign-source income.

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Working Paper 89/79; Optimal incentives Dom. invest. Presence Capital Flight