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Begin New Search Topic International Political Economy Political Geography Global Focus Content Type Working Paper Publishing Institution Peterson Institute for International Economics

1. Further Statistical Debate on "Too Much Finance"

Author:
William R. Cline
Publication Date:
10-2015
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Cline critiques OECD findings on "too much finance," which seem to imply that the optimal amount of credit in an economy is zero, given the linear specification of the main tests. If these results were taken literally, there would be a radical policy implication: Growth would be maximized by completely eliminating credit finance. He then finds that the negative impact of additional finance on growth is reversed when the appropriate (purchasing-power-parity) per capita income is applied and country fixed effects are removed. Separate tests for countries with intermediated finance below and above 60 percent of GDP show a significant positive effect of finance on growth in the lower group but an insignificant effect in the higher group. He also responds to critics of his earlier study.
Topic:
Economics, International Political Economy, International Trade and Finance, and GDP
Political Geography:
Global Focus

2. The OECD's "Action Plan" to Raise Taxes on Multinational Corporations

Author:
Gary Clyde Hufbauer, Eujiin Jung, Tyler Moran, and Martin Vieiro
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Hufbauer and colleagues critically evaluate the Organization for Economic Cooperation and Development’s ambitious multipart project titled Base Erosion and Profit Shifting (BEPS), which contains 15 "Actions" to prevent multinational corporations (MNCs) from escaping their "fair share" of the tax burden. Spurred by G-20 finance ministers, the OECD recommends changes in national legislation, revision of existing bilateral tax treaties, and a new multilateral agreement for participating countries. The proposition that MNCs need to pay more tax enjoys considerable political resonance as government budgets are strained, the world economy is struggling, income inequality is rising, and the news media have publicized instances of corporations legally lowering their global tax burdens by reporting income in low-tax jurisdictions and expenses in high-tax jurisdictions. Given that the US system taxes MNCs more heavily than other advanced countries and provides fewer tax incentives for research and development (R&D), implementation of the BEPS Actions would drive many MNCs to relocate their headquarters to tax-friendly countries and others to offshore significant amounts of R&D activity.
Topic:
Development, Economics, International Political Economy, and International Trade and Finance
Political Geography:
Global Focus