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The impact of the 2008 German corporate tax reform: A dynamic CGE analysis

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  • Radulescu, Doina
  • Stimmelmayr, Michael

Abstract

In this paper we develop the dynamic CGE model, ifoMod, which is designed to analyse the impact of fundamental tax reforms and in particular capital income tax reforms for Germany. The model is in line with neoclassical growth theory and features all important behavioural interactions between the four major building blocks of an economy including the firm and household sector, the government and the rest of the world. We consider firms of different legal forms which all face an intertemporal investment problem, a financing problem w.r.t. the optimal choice of debt and equity financing as well as a factor input problem when deciding on the optimal amount of different skill types of labour employed. We show the impact of different types of taxes on the behavioural margins of firms and households. The conducted simulation shows the impact of the latest German corporate tax reform of 2008 on the German macroeconomic variables such as investments, GDP, consumption and household's welfare.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 27 (2010)
Issue (Month): 1 (January)
Pages: 454-467

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Handle: RePEc:eee:ecmode:v:27:y:2010:i:1:p:454-467

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Capital income taxation Computable general equilibrium modelling Welfare analysis;

References

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Citations

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Cited by:
  1. Katharina Finke & Jost H. Heckemeyer & Timo Reister & Christoph Spengel, 2010. "Impact of Tax Rate Cut Cum Base Broadening Reforms on Heterogeneous Firms – Learning from the German Tax Reform 2008," Working Papers 1005, Oxford University Centre for Business Taxation.
  2. Rumpf, Dominik, 2011. "The dividends received deduction in the corporate income tax and cost of capital," Working Papers 01/2011, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
  3. Cristián Mardones Poblete, 2010. "Evaluando Reformas Tributarias en Chile con un Modelo CGE," Estudios de Economia, University of Chile, Department of Economics, vol. 37(2 Year 20), pages 243-284, December.

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