Completed Research Projects
Government regulation and international competition in the financial sector (HA3195/9)
Andreas Haufler, Daniel Gietl, Ulf Maier, and Miriam Müting; financed by the German Research Foundation (DFG)
This project aims to contribute to a closer integration of important issues in financial economics into the public economics literature. For this purpose, we analyze the effects of regulatory and tax policies in the financial sector in a general equilibrium setting that is typical for existing research in public economics and international trade, but that is still very rare in the financial economics literature. At the same time, we incorporate important elements from financial economics which have so far been largely neglected in the public finance literature. This concerns, in particular, the endogenous risk-taking decisions of banks and the implicit or explicit subsidization of these risks through government policies and hence taxpayers. A further important element is the international integration of capital and financial services markets, which expose national financial sectors, but also national regulatory and tax policies, to the forces of international competition. In such a framework we analyze the effects of national bank levies, capital requirements and bailout policies on different economic agents (banks, producers, consumers, taxpayers) and national welfare. We also raise issues of policy coordination. The project consists of four specific research areas, which aim to derive testable hypotheses on the effects of regulatory and tax policies for international competition in the banking sector.
- Gietl, D., Haufler, A. (2018): Bonus taxes and international competition for bank managers. European Economic Review 110, 41-60. [PDF, 648KB]
- Haufler, A., Lülfesmann, C. (2019). Heterogeneous banks, project risk, and capital requirements. Mimeo, University of Munich. [PDF, 365KB]
- Haufler, A., Maier, U. (2019): Regulatory competition in capital standards: A ‘race to the top’ result. Journal of Banking and Finance 106, 180-194. [PDF, 787KB]
- Haufler, A., Mardan, M., Schindler, D. (2018): Double tax discrimination to attract FDI and fight profit shifting: The role of CFC rules. Journal of International Economics 114, 25-43. [PDF, 474KB]
- Haufler, A., Wooton, I. (2018): Multinational banks in regulated markets: Is financial integration desirable? CRC TRR 190 Rationality and Competition, Working Paper No. 99; revised and resubmitted to Canadian Journal of Economics. [PDF, 670KB]
- Haufler, A. (2018). The political economy of the European banking union. Mimeo, University of Munich. [PDF, 355KB]
- Maier, U. (2016): Multinational banks: Supranational resolution regimes and the importance of capital regulation. Munich Discussion Paper No. 2016-10. [PDF, 411KB]
- Müting, M. (2020): Multinational lending retrenchment after the global financial crisis: The impact of information costs. Munich Discussion Paper No. 2020-02. [PDF, 440KB]
Firms with Heterogeneous Profitability: An Argument for "Pick-the-Winner" Strategies in Tax and Industrial Policies? (HA 3195/8)
Christian Bauer, Andreas Haufler and Davide Suverato; financed by the German Research Foundation (DFG)
The goal of this research project is to analyze the implications of firm heterogeneity for tax and industrial policies. Our objective is twofold. First, by exploiting the effects of firm heterogeneity, we aim at achieving a better understanding of the link between tax policies, firm behaviour, and tax revenues. Second, we ask if heterogenous firm models, which predict the endogenous selection into exporting and FDI according to a firm’s productivity level, provide new arguments for discriminating strategies in tax and industrial policies.
In the area of tax policy, we undertake three core projects. The first project asks if the factual preferential tax treatment of multinational companies can be explained by the fact that these firms are, on average, more productive than nationally operating firms (Bauer and Langenmayr, 2013). In the second project, we analyze to what extent recent tax-rate-cut-cum-base-broadening reforms in many OECD countries can be explained as an attempt of optimizing governments to attract the most profitable firms (Bauer et al., 2014). The third project asks whether subsidizing “national champions” can be explained as the optimal policy response in an environment with profit heterogeneity and union wage determination (Langenmayr et al., 2015). Another topics covered in the project are the effects of wage and trade policies when workers have different productivities (Bauer and Lingens, 2014, Suverato, 2014).
- Bauer, C., Davies, R., and Haufler, A. (2014). Economic integration and the optimal corporate tax structure with heterogeneous firms. Journal of Public Economics 110, 42-56.
- Bauer, C., and Langenmayr, D. (2013). Sorting into outsourcing. Are profits taxed at a gorilla's arm's length? Journal of International Economics 90, 326-336.
- Bauer, C.; Lingens, J. (2014): Does Collective Wage Bargaining Restore Efficiency in a Search Model with Large Firms? The Economic Journal 124, 1066-1085.
- Haufler, A., Stähler, F. (2013). Tax competition in a simple model with heterogeneous firms: How larger markets reduce profit taxes. International Economic Review 54, 665-692.
- Langenmayr, D., Haufler, A., and Bauer, C. (2015). Should tax policy favor high- or low-productivity firms? European Economic Review 73, 18-34.
- Suverato, D. (2014). Exports and the labor market. A dynamic model with on-the-job search. Munich Discussion Paper in Economics 2014-20.