No abstract

This paper uses affiliate-level data from Swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales. In line with previous results, we find little evidence for an effect of treaties on the level of total sales. We do, however, find that a tax treaty increases the probability of investment by a firm in a given country. In addition, we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent. This is consistent with treaties increasing the effective host tax. This suggests that tax treaties impact the behaviour of multinationals along some dimensions but not along others. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.

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Multinational enterprises frequently start, acquire, close and divest a¢ liates. There is a large literature on restructuring, which focuses on start-ups and acquisitions. The empirical literature on plant survival usually provides evidence from a single country. In contrast, this paper uses detailed survey data of Swedish multinationals to examine the characteristics that result in plant divestiture at the a¢ liate, …rm, industry, country and regional level. We provide propositions drawn on a straightforward model from Berg et al (2012) in which the primary motive to divest an a¢ liate is to …nance other investments in the network of the MNC. In line with conclusions from our model, we …nd that larger a¢ liates are more likely to be divested and these a¢ liates are small relative to the other operations of the …rm in the same country or region. We also …nd that divestiture begets divestiture, but acquisition does not, thus casting doubt on the notion of footloose multinationals. Several …rm, industry and country characteristics also matter.

The paper investigates the long-run relationships between budget deficits, inflation and monetary growth in Turkey considering two alternative trivariate systems corresponding to the narrowest and the broadest monetary aggregates. While the joint endogeneity of money and inflation rejects the validity of the monetarist view, lack of a direct relationship between inflation and budget deficits makes the pure fiscal theory explanations illegitimate for the Turkish case. Consistent with the policy regime of financing domestic debt through the commercial banking system, budget deficits lead to a growth not of currency seigniorage but of broad money in Turkey. This mode of deficit financing, leading to the creation of near money and restricting the scope for an effective monetary policy, may not be sustainable, as the government securities/broad money ratio cannot grow without limit.