Internationalization and business tax revenue—evidence from Germany

The ongoing internationalization of business activity fuels concerns that governments may lose their ability to tax business income. By using data on sixteen German states from 1970 to 2005, we estimate the impact of internationalization, measured by trade volumes and stocks of foreign direct investment, on business tax revenues. We control for the impact of internationalization on business profits. Surprisingly, we find strong and robust evidence for a positive impact of internationalization on tax revenue. An increase in the internationalization indicator of ten percent increases tax revenue by over three percent. This counterintuitive result may be explained by higher tax avoidance activity of purely national firms or by legal provisions in the tax law which can be used as tax loopholes in the case of domestic transactions as opposed to cross-border transactions.     

Intellectual property marketplaces and how they work: Evidence from German pharmaceutical firms

This article examines a sample of German pharmaceutical firms to highlight the strategic reasons why firms participate in various intellectual property (IP) marketplaces, both proprietary (patents and copyrights) and non-proprietary (open source and non-patented technology). The obstacles that prevent these marketplaces from functioning efficiently are also investigated. The analysis suggests that IP policy must embrace all IP forms and must recognise that IP marketplaces do not work “automatically” but suffer many institutional failures.     

TESTING FOR PURCHASING POWER PARITY AND UNCOVERED INTEREST PARITY IN THE PRESENCE OF MONETARY AND EXCHANGE RATE REGIME SHIFTS

Testing for purchasing power parity (PPP) and uncovered interest parity (UIP) has been the focus of many empirically oriented studies. While these simple economic theories of exchange rate and interest rate determination are theoretically attractive, the empirical support for these equilibrium conditions is at best mixed. Many potential reasons have been cited in the literature for the failure of such studies, ranging from market imperfections to inappropriate modelling strategies. The current state‐of‐the‐art procedure involves testing for two cointegrating vectors in a multivariate error correction model which may be economically identified as the PPP and UIP relations. However, such a procedure does not account for policy regime shifts which distort the underlying PPP and UIP relations. In this paper, a Markov‐switching vector error correction model (VECM) is considered for time series data in which monetary and exchange rate regime shifts are known to be present. Weak evidence in favour of PPP and UIP is established in a standard linear VECM, although the residuals of this model indicate that it is inappropriate in terms of functional form. The Markov‐switching VECM, however, provides convincing evidence in favour of both the PPP and UIP relations and a marked improvement in the residual distributions.     

Consumer Insurance Fraud/Abuse as Co-creation and Co-responsibility: A New Paradigm

This article discusses the implications of moral dissonance for managers, and how dissonance induced self justification can create an amplifying feedback loop and downward spiral of immoral behaviour. After addressing the nature of moral dissonance, including the difference between moral and hedonistic dissonance, the writer then focuses on dissonance reduction strategies available to managers such as rationalization, self affirmation, self justification, etc. It is noted that there is a considerable literature which views the organization as a potentially corrupting institution and a source of acute levels of moral dissonance. A simplified process model linking immoral behaviour, dissonance and rationalization is mooted, and some recent theories which question traditional dissonance models, including the free choice paradigm (FCP), are considered. The writer concludes that in the light of the above mentioned critical theories, it may be assumed that the levels of moral dissonance, and the extent of rationalization/self justification amongst managers, are more a function of personality and situational factors than previously assumed.     

The impact of trade promotion services on Canadian exporter performance

From 1999 to 2006, Canadian firms successfully diversified their exports to destinations beyond the United States while smaller firms increased their share in total exports. Both are explicit aims of the Trade Commissioner Service export promotion program. Exploiting assumptions from the treatment effects literature, we identify a causal, export‐boosting effect. In contrast with existing evidence for Latin American countries, the intensive margin effect—higher exports to existing product‐destination markets—dominates. Effects at the extensive margin—exporting more products to more destinations—are smaller and sensitive to identification assumptions. We interpret this evidence in light of trade models with heterogeneous firms.     

The Liberalisation of Rail Transport in the EU

On 1 January 2007 the European rail freight market, which has long suffered from fragmentation and a declining share of total transport services, will be fully opened to competition. What will be the consequences for the transport sector and the economy as whole? What further measures are needed to stabilise or increase the railways' share in the freight market? * Member and speaker of the EPP-ED Group (Christian Democrats) in the Committee on Transport and Tourism; rapporteur of the European Parliament responsible for railway issues. ** Views expressed here are not those of NDU or Minnesota.     

Der nächtliche Gang zum Kühlschrank – staatliche Selbstkontrolle und Schulden

Although policy-makers often promise to reduce budget deficits, most countries have high and increasing debt ratios. In this regard, government behaviour shows some intriguing similarities to individuals with self-control problems. If this comparison holds, there is a range of policy measures which could be taken by governments willing to reduce their debt burden.