Offshore financial centres and bank secrecy

E-print/Working paper (2014)

Asymmetric Competition among Nation States: A Differential Game Approach

in Journal of Public Economics (2014)

This paper analyzes the impact of foreign investments on a small country’s economy in the context of international competition. To that end, we model tax and public input competition within a differential ... [more ▼]

This paper analyzes the impact of foreign investments on a small country’s economy in the context of international competition. To that end, we model tax and public input competition within a differential game framework between two unequally sized countries. The model accounts for the widely recognized characteristic that small states are more flexible in their political decision-making than larger countries. However, we also acknowledge that small size is associated with limited institutional capacity in the provision of public services. The model shows that the long-term outcome of international competition crucially depends on the degree of capital mobility. In particular, we show that flexibility mitigates against - but does not eliminate - the likelihood of collapse in a small economy. Finally, we note that the beneficial effect of flexibility in a small state increases with its inefficiency in providing public services and with the degree of international openness. [less ▲]

Mergers in Fiscal Federalism

in Journal of Public Economics (2013), 105

Market Games in Successive Oligopolies

in Journal of Public Economic Theory (2013), 15(3), 397-410

Commodity taxation and regulatory competition

Presentation (2013, March)

Commodity taxation and regulatory competition

Presentation (2013, February 14)

Offshore financial centers: Tax havens or safe havens

E-print/Working paper (2013)

From tax evasion to tax planning

Scientific Conference (2013)

This paper analyzes within a simple model how a removal of bank secrecy can impact tax revenues and banks'profitability, assuming that offshore centers are able to offer sophisticated tax planning. Two ... [more ▼]

This paper analyzes within a simple model how a removal of bank secrecy can impact tax revenues and banks'profitability, assuming that offshore centers are able to offer sophisticated tax planning. Two alternative regimes are considered. A first, in which there is strict bank secrecy and a second, where there is international information exchange for tax purposes. In particular, we show that sharing tax information with onshore countries can be a dominant strategy for an OFC if there is enough scope for providing tax planning. Moreover, a partial reduction of tax liabilities can already prompt OFCs to voluntarily exchange relevant tax information. We also discuss the conditions under which the possible removal of bank secrecy may reduce or increase the onshore country's tax revenue. [less ▲]

Financial openness, disclosure and bank risk-taking in MENA countries

in Emerging Markets Review (2012), 13(3), 283-300

In this paper, we analyze the risk-taking behavior of banks in emerging economies in a context of international capital mobility. Our paper highlights a new channel through which depositors can exercise ... [more ▼]

In this paper, we analyze the risk-taking behavior of banks in emerging economies in a context of international capital mobility. Our paper highlights a new channel through which depositors can exercise pressure to control risk-taking. Depositors can reallocate their savings away from their home country to the more protective system of a developed economy. We recover a classical result according to which increased competition resulting from more international financial openness induces banks to take excessive risks. We find however that sufficiently high financial openness is necessary for a positive link between financial transparency and safe risk management. Finally, we test the relationship between disclosure, financial openness and bank risk-taking for a panel of 258 banks from the MENA region and Turkey. [less ▲]

Commodity taxation and regulatory competition

E-print/Working paper (2012)

This paper studies competition in regulation and commodity taxation between trading countries. We present a general equilibrium model in which destination based consumption taxes finance public goods ... [more ▼]

This paper studies competition in regulation and commodity taxation between trading countries. We present a general equilibrium model in which destination based consumption taxes finance public goods, while regulation of entry determines the number of firms in the markets. We find (i) no strategic interaction in commodity taxes; (ii) regulation leads to lower commodity tax rates if demand for public goods is more sensitive to income than demand for private goods and (iii) regulation policy is a strategically complement instrument if consumers do not over value product diversity. In the empirical part of the paper, we test our predictions using panel data for 21 OECD countries over the period 1990-2008. [less ▲]