Citation

Discussion Paper Details

Please find the details for DP8570 in an easy to copy and paste format below:

Full Details

Title: Tax havens or safe havens

Author(s): Patrice Pieretti, Jacques-Fran�ois Thisse and Skerdilajda Zanaj

Publication Date: September 2011

Keyword(s): institutional infrastructure competition, international banking centers, portfolio investments and tax competition

Programme Area(s): Financial Economics and Public Economics

Abstract: Our aim is to explain how a small country can be viable as an international banking center (IBC). We build a model in which mobile investors choose between two banking centers located respectively in a small country and in a large country. These countries compete in two instruments, taxation and institutional infrastructure. It follows that an IBC can be a tax haven, a safe haven, or both. A small country that hosts an IBC is a safe haven when it is able to provide a high level of institutional infrastructure, whereas it chooses to be a tax haven when it cannot be competitive in institutional infrastructure. Even in this last case, an IBC need not be as bad as claimed in the general press because its presence fosters institutional competition across countries, which is ultimately beneficial to all investors.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8570

Bibliographic Reference

Pieretti, P, Thisse, J and Zanaj, . 2011. 'Tax havens or safe havens'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8570