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The Impact of Goods and Services Tax on the Pattern of Canadian Consumer Spending and Saving

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  • Carvalho, Emanuel
  • Lian, Zeng

Abstract

This paper examines the effects of the Canadian Goods and Services Tax (GST) on the pattern of Canadian consumption and savings over a period of time. To test the change since the introduction of GST, we apply a version of the almost ideal demand system (AIDS) which allows individual demands to be conditional on shift parameters. The empirical results suggest important changes in the relationships since the introduction of GST in Canada. The appearance of GST in 1991 has significantly increased the share of savings and services, while the share of commodity goods has decreased.

Suggested Citation

  • Carvalho, Emanuel & Lian, Zeng, 2010. "The Impact of Goods and Services Tax on the Pattern of Canadian Consumer Spending and Saving," The Journal of Economic Asymmetries, Elsevier, vol. 7(1), pages 123-136.
    • Handle: RePEc:eee:joecas:v:7:y:2010:i:1:p:123-136
    DOI: 10.1016/j.jeca.2010.01.007
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    References listed on IDEAS

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    1. Alley, Andrew G & Ferguson, Donald G & Stewart, Kenneth G, 1992. "An Almost Ideal Demand System for Alcoholic Beverages in British Columbia," Empirical Economics, Springer, vol. 17(3), pages 401-418.
    2. Chalfant, James A, 1987. "A Globally Flexible, Almost Ideal Demand System," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 233-242, April.
    3. Berndt, Ernst R & Darrough, Masako N & Diewert, W E, 1977. "Flexible Functional Forms and Expenditure Distributions: An Application to Canadian Consumer Demand Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(3), pages 651-675, October.
    4. James A. Chalfant & Richard S. Gray & Kenneth J. White, 1991. "Evaluating Prior Beliefs in a Demand System: The Case of Meat Demand in Canada," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 476-490.
    5. Andreas Andrikopoulos & James Brox & Emanuel Carvalho, 1997. "The demand for domestic and imported alcoholic beverages in Ontario, Canada: a dynamic simultaneous equation approach," Applied Economics, Taylor & Francis Journals, vol. 29(7), pages 945-953.
    6. Brox, James A., 2003. "The impact of free trade with the United States on the pattern of Canadian consumer spending and savings," The North American Journal of Economics and Finance, Elsevier, vol. 14(1), pages 69-87, March.
    7. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Bhattarai, Keshab & Benjasak, Chonlakan, 2021. "Growth and redistribution impacts of income taxes in the Thai Economy: A dynamic CGE analysis," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).

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    More about this item

    Keywords

    E62; H23; Canada; Saving; GST; AIDS;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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