International relocation, the real exchange rate and welfare

Johdo, Wataru; Hashimoto, Kazuhito

doi:10.1016/j.jedc.2004.08.007

Cited by 6 publications

(4 citation statements)

References 27 publications

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“…Importantly, we find that none of the existing literature focuses on profit taxes, firm location and cross‐border ownership, nor is there any discussion of the interaction between these effects and welfare, either domestically or abroad, using a three‐country world economy. One possible exception is Johdo and Hashimoto (), who investigate the consumption and welfare effects of an increase in the profit tax in a two‐country world economy in which firms can relocate between the two countries. However, as they employ only a two‐country economy model, they are unable to consider the multilateral effect of a profit tax reduction.…”

Section: Introductionmentioning

confidence: 99%

“…In addition, there is a crucial distinction in the welfare implications obtainable from a two‐country model and those considered here. More specifically, in Johdo and Hashimoto's () two‐country framework, the welfare effect of a profit tax in the home country depends on whether the home country is rich or poor in the sense that its average share of equity holding is then greater or smaller than that of the foreign country. In addition, in the two‐country setting, if one country becomes a rich country, the remaining country will be automatically poor.…”

Section: Introductionmentioning

confidence: 99%

“…In addition, in the two‐country setting, if one country becomes a rich country, the remaining country will be automatically poor. Therefore, in Johdo and Hashimoto's () model, we could easily conjecture that a decrease in one country's profit tax rate affects each country's income asymmetrically, depending on that country's relative share of equity holdings. Conversely, in the three‐country setting, two of three countries do not necessarily become poor (or rich) together, even if the other country is rich (or poor).…”

Section: Introductionmentioning

confidence: 99%

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Corporate Tax Reductions, Cross-Border Ownership and Welfare

Johdo

2013

Japanese Economic Review

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In this paper, a three‐country model incorporating the cross‐border ownership of stock and international firm relocation is constructed. Using this model, the effects of a reduction in the corporate tax on welfare in all three countries is examined. The findings indicate that if the country undertaking the reduction is moderately rich, and one of the two remaining countries is rich while the other country is poor, the tax reduction not only brings about a positive effect on its own welfare, but also increases the welfare of the rich foreign country and lowers that of the poor foreign country.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Corporate Tax Reductions, Cross-Border Ownership and Welfare

Johdo

2013

Japanese Economic Review

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“…A number of other factors affecting firms' location choices other than product innovation have also been examined in the literature. These include: commodity taxes [6] ; emission taxes [17] ; public infrastructure [15] ; wage taxes [18] and profit tax [9,10] . For example, see Ricci [19] for an extensive survey of location theories.…”

Section: Introductionmentioning

confidence: 99%

New Entry, International Location Patterns and Welfare

Johdo¹

2009

American Journal of Economics and Business Administration

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Problem statement: Recently, firms have very actively invested across national borders and the international concentration of industrial activities in emerging countries and developed countries has been rapid. In the new international trade literature, static trade models with firms location have been widely used, but do not allow for endogenous spatial distribution of firms in the literature. In addition, few studies address the impact of an exogenous increase in the given number of firms on location patterns and welfare in the general equilibrium trade models. Approach: This study constructed a two-country model with monopolistic competition where firms can relocate and pure profits are positive because the total number of firms is fixed. Results: The results indicated that when the given number of firms increases due to new entry, then the number of firms in each country increases at the rate that is equal to the relative size of country and consumers benefit from it. Conclusion: This study simply had analyzed the effects of an exogenous increase in the number of firms. In order to endogenize the number of firms, modeling of R and D investment is necessary. The other weakness of this study is the assumption that a country owns a constant share of the world profit. I expect that the research would become more interesting if the domestic share of the world profit is made endogenous. These extensions remain for future research

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Welfare effects of monetary policy in an economy with vertical production and trade: An analysis based on the perspective of local currency pricing

Dohwa¹

2014

Economic Modelling

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International relocation, the real exchange rate and welfare

Cited by 6 publications

References 27 publications

Corporate Tax Reductions, Cross-Border Ownership and Welfare

Corporate Tax Reductions, Cross-Border Ownership and Welfare

New Entry, International Location Patterns and Welfare

Welfare effects of monetary policy in an economy with vertical production and trade: An analysis based on the perspective of local currency pricing

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