Project on corporate taxation and exports

I currently work on a joint research project with Lisandra Flach and Michael Irlacher.  A new working paper will come soon. 

 

We analyze the effects of corporate tax rate reforms on multi-product exporters. We introduce tax policy in a multi-product rm model featuring linear demand as well as heterogeneity across firms and products. We show that a lower foreign tax rate induces exporters to reduce product scope to this destination, and leads to a larger skewness of within- firm sales. After the policy change, exporters face foreign rms with lower effective costs and hence stronger competition, which induces them to shift resources towards the better performing products. We combine data on corporate tax rates over the period 2005-2012 with trade data for 70 countries. We estimate the effects of changes in the destination tax rate on bilateral export margins and fi nd strong support for our theoretical predictions.

 

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