Tax Reform and Coordination in a Currency Union
AbstractWe propose a two-country DSGE model to analyze short-term and long-term impact of a modification of consumption and labor tax rate in one country in a currency union. The model embodies the fact that firms differ in their pricing behavior after a VAT tax increase. Due to the common monetary policy, national tax policies have large spill-overs on the rest of the currency union. Furthermore, a fiscal devaluation is different from a nominal devaluation due to the common monetary policy.
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Bibliographic InfoPaper provided by CEPII research center in its series Working Papers with number 2012-23.
Date of creation: Oct 2012
Date of revision:
Fiscal Policy; Monetary Policy; DSGE; Value added tax; Monetary Union;
Other versions of this item:
- F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
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