A Pecking Order Theory of Capital Inflows and International Tax Principles

Author/Editor:

Chi-Wa Yuen ; Assaf Razin ; Efraim Sadka

Publication Date:

April 1, 1996

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Even though financial markets today show a high degree of integration, the world capital market is still far from the textbook story of high capital mobility. The purpose of this paper is to highlight key sources of market failure in the context of international capital flows and to provide guidelines for efficient tax structure in the presence of capital market imperfections. The analysis distinguishes three types of international capital flows: foreign portfolio debt investment, foreign portfolio equity investment, and foreign direct investment. The paper emphasizes the efficiency of a nonuniform tax treatment of the various vehicles of international capital flows.

Series:

Working Paper No. 1996/026

Subject:

Balance of payments Capital flows Capital income tax Capital inflows Corporate income tax Foreign direct investment Taxes

English

Publication Date:

April 1, 1996

ISBN/ISSN:

9781451844337/1018-5941

Stock No:

WPIEA0261996

Pages:

28

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