Abstract
Removal of the Interest Equalization Tax (IET) in the United States on January 29 of this year restored to U.S. investors freedom to purchase bonds issued by any foreign issuer, or by U.S. companies in the Euro-bond market, without paying a penality. The termination of the Foreign Direct Investment Program (FDIP) on the same date gave to U.S. direct investors full freedom to shoose whether to draw on U.S. markets or foriegn markets to finance their foreign investment outlats. These actions increated the potential for capital outflows from the United States in response to differentials in investor yields on U.S. and foreign (including Euro-) bonds, and in costs paid by U.S. or foreign companies for the long-term funds.
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