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A dynamic general equilibrium model for tax policy analysis in Colombia

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  • Hernandez, Gustavo Adolfo
  • Light, Miles
  • Rutherford, Thomas
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    Abstract

    The paper documents a dynamic general equilibrium model for Colombia based on national accounts from 1999. The paper is part of a project intended to develop a capacity for the the design, specification, and application of computable models within the Colombian Ministry of Finance and Department of National Planning. Our analytical framework includes both forwardlooking expectations and Harris-Todaro labor markets. In the present paper we compare numerical results from the dynamic model with simpler static and steady-state formulations to highlight the importance of transitional effects in evaluating tax policy reform. Our applications include measurement of the marginal cost of funds from different tax bases and the evaluation of discrete changes in tariff structure. The structure of the labor and intermediate credit markets have important implications for the ranking alternative tax reform proposals.

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    File URL: http://mpra.ub.uni-muenchen.de/28435/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 28435.

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    Date of creation: May 2002
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    Handle: RePEc:pra:mprapa:28435

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    Related research

    Keywords: Dynamic general equlibrium; tax reform;

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    References

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    1. John Hutton & Anna Ruocco, 1999. "Tax Reform and Employment in Europe," International Tax and Public Finance, Springer, vol. 6(3), pages 263-287, August.
    2. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    3. Dantzig, George B. & Manne, Alan S., 1974. "A complementarity algorithm for an optimal capital path with invariant proportions," Journal of Economic Theory, Elsevier, vol. 9(3), pages 312-323, November.
    4. Rutherford, Thomas F. & Tarr, David G., 2002. "Trade liberalization, product variety and growth in a small open economy: a quantitative assessment," Journal of International Economics, Elsevier, vol. 56(2), pages 247-272, March.
    5. Lau, Morten I. & Pahlke, Andreas & Rutherford, Thomas F., 2002. "Approximating infinite-horizon models in a complementarity format: A primer in dynamic general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 577-609, April.
    6. Thomas F. Rutherford & Miles K. LIGHT, 2002. "A General Equilibrium Model for Tax Policy Analysis in Colombia: The MEGATAX Model," ARCHIVOS DE ECONOMÍA 011291, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    7. Terje Hansen & Tjalling C. Koopmans, 1972. "On the Definition and Computation of a Capital Stock Invariant Under Optimization," Cowles Foundation Discussion Papers 313R, Cowles Foundation for Research in Economics, Yale University.
    8. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, vol. 59(1), pages 138-48, March.
    9. Hatta, Tatsuo, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Wiley Blackwell, vol. 44(1), pages 1-21, February.
    10. Thomas F. Rutherford & David G. Tarr, 2003. "Regional Trading Arrangements for Chile: do the Results Differ with a Dynamic Model?," Economie Internationale, CEPII research center, issue 94-95, pages 261-281.
    11. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2002. "Trade Policy Options for Chile: The Importance of Market Access," World Bank Economic Review, World Bank Group, vol. 16(1), pages 49-79, June.
    12. Ferris, Michael C. & Munson, Todd S., 2000. "Complementarity problems in GAMS and the PATH solver," Journal of Economic Dynamics and Control, Elsevier, vol. 24(2), pages 165-188, February.
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    Cited by:
    1. Ömer Özak & Oscar Mauricio Valencia, 2002. "Impacto macroeconómico y distributivo del impuesto de seguridad democrática," ARCHIVOS DE ECONOMÍA 011294, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    2. Takeda, Shiro, 2007. "The double dividend from carbon regulations in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 21(3), pages 336-364, September.
    3. Gustavo Adolfo HERNANDEZ DIAZ, 2011. "Impuestos parafiscales y mercado laboral: Un análisis de Equilibrio General Computable," ARCHIVOS DE ECONOMÍA 008954, DEPARTAMENTO NACIONAL DE PLANEACIÓN.

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