Fiscal Policy and the Firm: Do Low Corporate Tax Rates Attract Multinational Corporations?

36 Pages Posted: 10 Jan 2007 Last revised: 23 Dec 2011

Nathan M. Jensen

Washington University in St. Louis - Department of Political Science

Date Written: January 1, 2007

Abstract

In this paper, I explore the relationship between corporate tax rates and multinational production in the OECD from 1980-2000. I utilize a time-series-cross-sectional general error correction model to explore the impact of corporate taxation rates and FDI inflows in 19 OECD economies from 1990-2000. I find that there is no relationship between corporate taxation and the investments of multinational corporations.

Keywords: Foreign Direct Investment, Corporate Taxes, Race to the Bottom, Tax Competition, Multinational Corporation, Globalization

JEL Classification: E62, F21, H25, H32

Suggested Citation

Jensen, Nathan M., Fiscal Policy and the Firm: Do Low Corporate Tax Rates Attract Multinational Corporations? (January 1, 2007). Available at SSRN: https://ssrn.com/abstract=955713 or http://dx.doi.org/10.2139/ssrn.955713

Nathan M. Jensen (Contact Author)

Washington University in St. Louis - Department of Political Science ( email )

219 Eliot Hall
St. Louis, MO 63130
United States

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