Nontraded Goods, Capital Taxes, and Temporary Immigration in a Small Open Economy
Titel:
Nontraded Goods, Capital Taxes, and Temporary Immigration in a Small Open Economy
Auteur:
Hatzipanayotou, Panos
Verschenen in:
International economic journal
Paginering:
Jaargang 8 (1994) nr. 4 pagina's 15-26
Jaar:
1994
Inhoud:
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 is important in evaluating its effects on various economic variables. [F20, F22]
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