01964cas a2200253 a 4500 AALejournalIMF005887 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451872835 1018-5941 BD-DhAAL BD-DhAAL Klemm, Alexander. Empirical Evidenceon the Effects of Tax Incentives / Alexander Klemm, Stefan Parys. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (25 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper considers two empirical questions about tax incentives: (1) are incentives used as tools of tax competition and (2) how effective are incentives in attracting investment? To answer these, we prepared a new dataset of tax incentives in over 40 Latin American, Caribbean and African countries for the period 1985-2004. Using spatial econometrics techniques for panel data to answer the first question, we find evidence for strategic interaction in tax holidays, in addition to the well-known competition over the corporate income tax rate. We find no evidence, however, for competition over investment allowances and tax credits. Using dynamic panel data econometrics to answer the second question, we find evidence that lower corporate income tax rates and longer tax holidays are effective in attracting FDI, but not in boosting gross private fixed capital formation or growth. Mode of access: Internet Parys, Stefan. IMF Working Papers; Working Paper ; No. 2009/136 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/136/001.2009.issue-136-en.xml IMF e-Library