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Title: |
Inflation, Taxation, and the International Allocation of Capital |
| Author: |
Wong, David Y. |
| Author
Affiliation: |
Fed Res Bank,
Phila |
| Source: |
International Economic Journal, Spring 1989, v. 3, no. 1, pp. 17-34 |
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Publication Date: |
Spring 1989 |
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Abstract: |
This paper examines the interactive
effects of inflation and taxation on the international allocation of
capital using an open-economy monetary growth model. The joint effects
of inflation and taxation on international capital flows, the
economy-wide debt-equity ratio, and the various balance of payments
accounts are explicitly modeled. Elements of the analysis include the
important issue of investment finance, and integrated tax structure, and
depreciation accounting. It is found that inflation weakens the current
account position. Also, the effects of inflation on capital intensity
are, in general, sensitive to the method of investment finance. |
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