A1 - Anne-Laure Delatte
A1 - Amélie Guillin
A1 - Vincent Vicard
TI - Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments
IS - 2020-07
T3 - Working Papers
KW - Cross-Border Investments
KW - Capital Openness
KW - Tax Havens
KW - Gravity Equation
N2 - Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are `abnormal' – unexplained – stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
ER -