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- W2160994472 abstract "A recent empirical literature has arisen documenting the response of one nation's policy choices, including tax, environmental, and labour policies, to those of others. This has been largely interpreted as evidence of competition, be it for mobile resources (like FDI, taxable book income, etc.) or yardstick. We present a third explanation based on learning. When countries' tax choices reect private information about unobserved conditions, this encourages na- tions to update their policies not in order to retain investment or manipulate trade ows, but because the new information conveyed by overseas tax rates allows them to ne-tune their own policies. With this social learning, coun- tries converge on their optimal policies faster than in isolation. Furthermore, this convergence implies a pattern of policy convergence often attributed to competition for mobile resources. The benets of social learning are smaller in the presence of policy adjustment costs although welfare remains higher than learning in isolation. In addition, adjustment costs result in inecient policy adjustment because countries do not internalize the benets conveyed by their own adjustments to other nations. We further show that these baseline results are robust to alternative network architectures, the choice of which can be used to replicate stylized facts found in the empirical tax competition literature. Fi- nally, we discuss additional applications of social learning with adjustment costs well beyond the international tax debate." @default.
- W2160994472 created "2016-06-24" @default.
- W2160994472 creator A5028663820 @default.
- W2160994472 creator A5056520021 @default.
- W2160994472 date "2013-01-01" @default.
- W2160994472 modified "2023-09-25" @default.
- W2160994472 title "Learning and International Policy Diusion { The Case of Corporate Tax Policy" @default.
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