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Begin New Search Political Geography Global Focus Author Branimir Jovanovic

1. Firm Profits and Government Activity: An Empirical Investigation

Author:
Petar Jolakoski, Branimir Jovanovic, Joana Madjoska, Viktor Stojkoski, and Dragan Tevdovski
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
If firm profits rise to a level far above than what would have been earned in a competitive economy, this might give the firms market power, which might in turn influence the activity of the government. In this paper, we perform a detailed empirical study on the potential effects of firm profits and markups on government size and effectiveness. Using data on 30 European countries for a period of 17 years and an instrumental variables approach, we find that there exists a robust relationship between firm gains and the activity of the state, in the sense that higher firm profits reduce government size and effectiveness. Even in a group of developed countries, such as the European countries, firm power may affect state activity.
Topic:
Development, Economics, Government, International Political Economy, and Profit
Political Geography:
Europe and Global Focus

2. Labour Taxes and International Trade: The Role of Domestic Labour Value Added

Author:
Amat Adarov, Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper revisits the relationship between labour taxation and international trade, focusing on the role of domestic labour value added. Using sectoral data from 41 EU and OECD economies over the period 2005-2014, we assess how labour taxes affect exports and imports and how domestic labour value added shapes this relationship. We find that higher labour taxes reduce exports but that the effect depends to a large extent on the share of domestic labour value added, which differs by industries, countries and time periods. Imports do not seem to be affected. This implies that changes in labour taxes will not affect all sectors and countries in the same way and that policy makers should be aware of this when deciding on labour taxes. We also calculate the contribution of labour tax changes to the export dynamics in the analysed period and sample of countries, finding that in general the contribution is small.
Topic:
International Trade and Finance, Labor Issues, Tax Systems, Exports, and Imports
Political Geography:
Global Focus

3. How do Corporate Taxes affect International Trade?

Author:
Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper investigates how corporate income taxes affect international trade, and identifies the underlying channel. Using data on 33 NACE sectors, for 34 EU and OECD economies, over the period 2005-2014, we find that corporate income taxes reduce exports and imports only when the stock of foreign direct investment (FDI) is high. The effect is present primarily in the service sector and in countries with low corporate taxes. We interpret these findings as evidence that multinational enterprises reduce their operations in countries that raise their corporate taxes. The effect has been found to be small on aggregate, implying that the expected increase in corporate taxes in the future, arising from the global minimum tax, is unlikely to hurt international trade.
Topic:
International Trade and Finance, Foreign Direct Investment, Tax Systems, Exports, Profit, Imports, and Corporations
Political Geography:
Global Focus