IDEAS home Printed from https://ideas.repec.org/a/rre/publsh/v44y2014i2p177-209.html
   My bibliography  Save this article

A Regional Model of Growth Oriented Fiscal Policy: An Application to Georgia and Its Competitor States

Author

Listed:
  • Jeffrey Condon

    (Georgia State University)

  • Andrew Feltenstein

    (Georgia State University)

  • Florenz Plassman

    (Binhamton University)

  • Mark Rider

    (Georgia State University)

  • David L. Sjoquist

    (Georgia State University)

Abstract

A number of U.S. states are considering tax reforms that would significantly reduce or eliminate income taxes and recover the lost revenue by increasing its sales taxes. To gauge the economic effects of such reforms, we construct a multi-regional, dynamic, open economy, general equilibrium (CGE) model. Our model is an advancement over existing regional CGE models used to simulate the impact of state tax reforms in the U.S. context. We simulate the impact of a variety of tax reforms and find that Georgia’s economy benefits but at the expense of the five comparison states we include.

Suggested Citation

  • Jeffrey Condon & Andrew Feltenstein & Florenz Plassman & Mark Rider & David L. Sjoquist, 2014. "A Regional Model of Growth Oriented Fiscal Policy: An Application to Georgia and Its Competitor States," The Review of Regional Studies, Southern Regional Science Association, vol. 44(2), pages 177-209, Summer.
    • Handle: RePEc:rre:publsh:v44:y:2014:i:2:p:177-209
    as

    Download full text from publisher

    File URL: http://journal.srsa.org/ojs/index.php/RRS/article/view/44.2.4/pdf/
    File Function: To View On Journal Page
    Download Restriction: no
    File URL: http://journal.srsa.org/ojs/index.php/RRS/article/download/44.2.4/pdf/
    File Function: To Download Article
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Edmiston, Kelly D., 2002. "Strategic Apportionment of the State Corporate Income Tax: An Applied General Equilibrium Analysis," National Tax Journal, National Tax Association, vol. 55(N. 2), pages 239-262, June.
    2. John W. Diamond & George R. Zodrow (ed.), 2008. "Fundamental Tax Reform: Issues, Choices, and Implications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262042479, December.
    3. James Giesecke, 2003. "Targeting Regional Output with State Government Fiscal Instruments: a Dynamic Multi‐regional CGE Analysis," Australian Economic Papers, Wiley Blackwell, vol. 42(2), pages 214-233, June.
    4. Nicolaus Tideman & Ebere Akobundu & Andrew Johns & Prapaiporn Wutthicharoen, 2002. "The Avoidable Excess Burden of Broad-Based U.S. Taxes," Public Finance Review, , vol. 30(5), pages 416-441, September.
    5. Zodrow,George R. & Mieszkowski,Peter (ed.), 2002. "United States Tax Reform in the 21st Century," Cambridge Books, Cambridge University Press, number 9780521803830.
    6. Harvey Cutler & Irina Strelnikova, 2004. "The Impact of the US Sales Tax Rate on City Size and Economic Activity: A CGE Approach," Urban Studies, Urban Studies Journal Limited, vol. 41(4), pages 875-885, April.
    7. Andrew Feltenstein & Florenz Plassmann, 2008. "The Welfare Analysis of a Free Trade Zone: Intermediate Goods and the Asian Tigers," The World Economy, Wiley Blackwell, vol. 31(7), pages 905-924, July.
    8. Edward C. Waters & David W. Holland & Bruce A. Weber, 1997. "Economic Impacts of a Property Tax Limitation: A Computable General Equilibrium Analysis of Oregon's Measure 5," Land Economics, University of Wisconsin Press, vol. 73(1), pages 72-89.
    9. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 379-475, Elsevier.
    10. Mendoza, Enrique G & Tesar, Linda L, 1998. "The International Ramifications of Tax Reforms: Supply-Side Economics in a Global Economy," American Economic Review, American Economic Association, vol. 88(1), pages 226-245, March.
    11. Morgan, William & Mutti, John & Patridge, Mark, 1989. "A Regional Equilibrium Model of the United States: Tax Effects on Factor Movements and Regional Production," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 626-635, November.
    12. Roxana Julia-Wise & Stephen C. Cooke & RDavid Holland, 2002. "A Computable General Equilibrium Analysis of a Property Tax Limitation Initiative in Idaho," Land Economics, University of Wisconsin Press, vol. 78(2), pages 207-227.
    13. Feltenstein, Andrew, 1986. "An intertemporal general equilibrium analysis of financial crowding out : A policy model and an application to Australia," Journal of Public Economics, Elsevier, vol. 31(1), pages 79-104, October.
    14. Andrew Feltenstein & Maral Shamloo, 2013. "Tax reform, the informal economy, and bank financing of capital formation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 1-28, February.
    15. Dagney Faulk & Nalitra Thaiprasert & Michael Hicks, 2010. "The Economic Effects of Replacing the Property Tax with a Sales or Income Tax:A Computable General Equilibrium Approach," Working Papers 201008, Ball State University, Department of Economics, revised Jun 2010.
    16. Georg Hirte, 1998. "original: Welfare effects of regional income taxes Results of an interregional CGE analysis for Germany," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 32(2), pages 201-219.
    17. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production II: Tax Rules," American Economic Review, American Economic Association, vol. 61(3), pages 261-278, June.
    18. Georg Hirte, 1998. "Welfare effects of regional income taxes: Results of an interregional CGE analysis for Germany," ERSA conference papers ersa98p31, European Regional Science Association.
    19. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
    20. Edmiston, Kelly D., 2002. "Strategic Apportionment of the State Corporate Income Tax: An Applied General Equilibrium Analysis," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(2), pages 239-262, June.
    21. Plassmann, Florenz, 2005. "The advantage of avoiding the Armington assumption in multi-region models," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 777-794, November.
    22. Karen Turner & Soo Jung Ha & Geoffrey J.D. Hewings & Peter Mcgregor & Kim Swales, 2012. "Econometric Estimation Of Armington Import Elasticities For A Regional Cge Model Of The Illinois Economy," Economic Systems Research, Taylor & Francis Journals, vol. 24(1), pages 1-19, April.
    23. Pereira, Alfredo M. & Shoven, John B., 1988. "Survey of dynamic computational general equilibrium models for tax policy evaluation," Journal of Policy Modeling, Elsevier, vol. 10(3), pages 401-436.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Plassmann, Florenz & Feltenstein, Andrew, 2016. "How large do multi-region models need to be?," Journal of Policy Modeling, Elsevier, vol. 38(1), pages 138-155.
    2. James A. Giesecke & John R. Madden, 2013. "Evidence-based regional economic policy analysis: the role of CGE modelling," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 285-301.
    3. Andrew Feltenstein & Mark Rider & David L. Sjoquist & John V. Winters, 2019. "The Impact of Interstate Mobility on the Effectiveness of Property Tax Reduction in Georgia," Center for State and Local Finance Working Paper Series cslf1907, Andrew Young School of Policy Studies, Georgia State University.
    4. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.
    5. Guo, Jang-Ting & Lansing, Kevin J., 1999. "Optimal taxation of capital income with imperfectly competitive product markets," Journal of Economic Dynamics and Control, Elsevier, vol. 23(7), pages 967-995, June.
    6. Mark D. Partridge & Dan S. Rickman, 1998. "Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal," International Regional Science Review, , vol. 21(3), pages 205-248, December.
    7. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 379-475, Elsevier.
    8. Alan J. Auerbach, 2006. "The Future of Capital Income Taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 27(4), pages 399-420, December.
    9. Börjesson, Maria & Asplund, Disa & Hamilton, Carl, 2021. "Optimal kilometre tax for electric passenger cars," Working Papers 2021:3, Swedish National Road & Transport Research Institute (VTI).
    10. Parry, Ian W.H., 2008. "How should heavy-duty trucks be taxed?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 651-668, March.
    11. Tim Besley & Rohini Pande, 1998. "Read my lips: the political economy of information transmission," IFS Working Papers W98/13, Institute for Fiscal Studies.
    12. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 145-190, March.
    13. Jaume Sempere, 2022. "On potential Pareto gains from free trade areas formation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(6), pages 1502-1518, December.
    14. da Costa, Carlos E. & Pereira, Thiago, 2014. "On the efficiency of equal sacrifice income tax schedules," European Economic Review, Elsevier, vol. 70(C), pages 399-418.
    15. Christian Keuschnigg, 2008. "Corporate Taxation and the Welfare State," Working Papers 0813, Oxford University Centre for Business Taxation.
    16. Juan Pablo Gama & Rodrigo J. Raad, 2023. "Larde public expenditure shocks in a Ramsey taxation model with default," Textos para Discussão Cedeplar-UFMG 665, Cedeplar, Universidade Federal de Minas Gerais.
    17. Richter, Wolfram F., 2009. "Taxing education in Ramsey's tradition," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1254-1260, December.
    18. Takuya Obara & Yoshitomo Ogawa, 2024. "Optimal taxation in an endogenous fertility model with non-cooperative behavior," Review of Economics of the Household, Springer, vol. 22(1), pages 173-197, March.
    19. Stéphane Gauthier & Guy Laroque, 2019. "Production efficiency and profit taxation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 52(2), pages 215-223, February.
    20. Heider, Florian & Inderst, Roman, 2021. "A Corporate Finance Perspective on Environmental Policy," EconStor Preprints 253669, ZBW - Leibniz Information Centre for Economics.

    More about this item

    Keywords

    dynamic simulation models; fundamental tax reform;

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rre:publsh:v44:y:2014:i:2:p:177-209. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tammy Leonard & Lei Zhang (email available below). General contact details of provider: http://www.srsa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.