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Title: |
Nontraded Goods, Capital Taxes, and Temporary
Immigration in a Small Open Economy |
| Author: |
Hatzipanayotou,
Panos |
| Author
Affiliation: |
U CT |
| Source: |
International Economic Journal, Winter 1994, v. 8, no. 4, pp. 15-26 |
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Publication Date: |
Winter 1994 |
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Abstract: |
This paper extends the standard (one-good,
two-factor) model of international capital and labor mobility by
incorporating a nontraded good within a small capital-exporting,
labor-importing country. It examines, from this country's perspective,
the effects of capital taxes and temporary immigration on the nominal
wage, and on welfare, and derives the optimal policy toward capital. It
demonstrates, among other things, that (i) the optimal policy toward
capital may be a tax on its domestic rate of return, depending on the
factor intensity of the nontraded good and on the relationship between
capital and labor in production, and (ii) the distinction between
temporary and permanent immigration in evaluating its effects on various
economic variables. |
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