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Learning Right And Learning From The Left: Diffusion Of Corporate Tax Policy In The OECD

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Executive Summary

There is an increased focus in comparative politics and international relations on how choices of national governments are dependent on choices made by governments in other countries. The authors argue that while the relationship between policy choices across countries is often labeled as either diffusion or competition, in many cases the theoretical mechanisms underpinning these labels are unclear. In this paper, they build a model of social learning with a specific application to the diffusion of corporate tax reductions. This model yields predictions that are differentiable from existing models of tax competition. Specifically, they argue that social learning is most likely to take place in the wake of tax policy cuts by left governments.

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