Book contents
- Introduction to Computable General Equilibrium Models
- Introduction to Computable General Equilibrium Models
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Text Boxes
- Acknowledgments
- About This Book
- 1 Introduction to Computable General Equilibrium Models
- 2 Elements of a Computable General Equilibrium Model
- 3 The CGE Model Database
- 4 Final Demand in a CGE Model
- 5 Supply in a CGE Model
- 6 Factors of Production in a CGE Model
- 7 Trade in a CGE Model
- 8 Taxes in a CGE Model
- 9 Regulations in a CGE Model
- 10 Conclusion
- Model Exercises
- Practice and Review Answer Key
- Model Exercise Answer Key
- Book part
- Glossary
- References
- Author Index
- Subject Index
8 - Taxes in a CGE Model
Published online by Cambridge University Press: 11 December 2020
- Introduction to Computable General Equilibrium Models
- Introduction to Computable General Equilibrium Models
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Text Boxes
- Acknowledgments
- About This Book
- 1 Introduction to Computable General Equilibrium Models
- 2 Elements of a Computable General Equilibrium Model
- 3 The CGE Model Database
- 4 Final Demand in a CGE Model
- 5 Supply in a CGE Model
- 6 Factors of Production in a CGE Model
- 7 Trade in a CGE Model
- 8 Taxes in a CGE Model
- 9 Regulations in a CGE Model
- 10 Conclusion
- Model Exercises
- Practice and Review Answer Key
- Model Exercise Answer Key
- Book part
- Glossary
- References
- Author Index
- Subject Index
Summary
This chapter examines the treatment of trade and domestic taxes in a computable general equilibrium (CGE) model. Trade taxes are imposed on imports and exports of goods and services. Domestic taxes are taxes paid by production activities on output and factor use and by purchasers on sales of intermediate and retail goods, and income taxes. We trace the tax data in a Social Accounting Matrix (SAM) to describe the agent and the economic activity on which the tax is levied and the amount of revenue generated by each tax; we also show how to use the SAM’s data to calculate tax rates. Partial equilibrium diagrams then illustrate the theoretical effects of taxes on economic activity and welfare. The results of tax policy experiments using a CGE model support the theoretical predictions and offer insight into the economywide effects of each tax. Three applied examples of tax policy analysis explore the second-best welfare effects of a tax, the marginal welfare impacts of a country’s entire tax structure, and the elimination of import tariffs in a preferential trade agreement.
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- Information
- Introduction to Computable General Equilibrium Models , pp. 219 - 261Publisher: Cambridge University PressPrint publication year: 2021