Short-term and long-term government debt and non-resident interest withholding taxes

This paper examines the incidence of nonresident interest withholding taxes in the international 3-month Treasury-bill market and the international 5-year government bond market. The approach is one of pooled cross-section, time-series regressions. The evidence suggests that the yields on national Treasury-bills and on 5-year government bonds fully reflect the nonresident interest withholding taxes imposed on American or Japanese investors. Nonresident interest withholding taxes on short-term and long-term government debt thus do not appear to be borne by the international investor.