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The Effects of Capital Taxation Using Dynamic Macro-Econometric Model of the Japanese Economy ―Simulation Analysis Including Households without Financial Assets―

Author

Listed:
  • Daisuke Ishikawa

    (Former Senior Economist, Policy Research Institute, Ministry of Finance)

  • Dun-Yen Wang

    (Researcher at the Research Center for Advanced Policy Studies, Institute of Economic Research, Kyoto University)

  • Masahiko Nakazawa

    (Visiting Scholar, Policy Research Institute, Ministry of Finance)

Abstract

In order to maximize social welfare, it is important to ensure stable economic growth by revitalizing private-sector. From this viewpoint, it is necessary to design capital taxation such that it avoids undue distortions in the corporate sector as much as possible. On the other hand, as the government’s fiscal situation is deteriorating, reform on tax system must also be consistent with fiscal sustainability. With these perspectives in mind, we developed a dynamic macro-econometric model (dynamic CGE model) that contributes to the analysis of capital taxation, in reference to Radulescu (2007) and Radulescu and Stimmelmayr (2010), while including households without financial assets. In this paper, we report the results of various numerical simulation analyses, maintaining neutrality of tax revenues.

Suggested Citation

  • Daisuke Ishikawa & Dun-Yen Wang & Masahiko Nakazawa, 2018. "The Effects of Capital Taxation Using Dynamic Macro-Econometric Model of the Japanese Economy ―Simulation Analysis Including Households without Financial Assets―," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 14(4), pages 585-612, July.
    • Handle: RePEc:mof:journl:ppr14_04_04
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    More about this item

    Keywords

    dynamic macro-econometric model; capital taxation; liquidity-constrained consumers; tax revenue neutrality;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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