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Evaluating the Aggregate Effects of Tax and Benefit Reforms

Author

Listed:
  • Michal Horvath

    (University of York)

  • Matus Senaj

    (Council for Budget Responsibility)

  • Zuzana Siebertova

    (Council for Budget Responsibility)

  • Norbert Svarda

    (Council for Budget Responsibility)

  • Jana Valachyova

    (Council for Budget Responsibility)

Abstract

The paper introduces a new way of linking microsimulation models with dynamic general equilibrium frameworks to obtain an evaluation of the impact of detailed tax and benefit measures on the aggregate economy. The approach involving polynomial approximation to aggregated output from behavioural microsimulation permits the solution for the long-run steady state and the transition path in one numerical simulation of the dynamic aggregate economy. The practical usefulness of the approach is demonstrated by evaluating actual and hypothetical tax reforms in the context of Slovakia.

Suggested Citation

  • Michal Horvath & Matus Senaj & Zuzana Siebertova & Norbert Svarda & Jana Valachyova, 2018. "Evaluating the Aggregate Effects of Tax and Benefit Reforms," Working Papers Working Paper No. 1/2018, Council for Budget Responsibility.
  • Handle: RePEc:cbe:wpaper:201801
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Benczúr, Péter & Kátay, Gábor & Kiss, Áron, 2018. "Assessing the economic and social impact of tax and benefit reforms: A general-equilibrium microsimulation approach applied to Hungary," Economic Modelling, Elsevier, vol. 75(C), pages 441-457.
    2. Galuščák, Kamil & Kátay, Gábor, 2019. "Tax-benefit systems and differences in aggregate labour force participation: Comparative evidence from the Czech Republic and Hungary," Economic Systems, Elsevier, vol. 43(3).

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    More about this item

    Keywords

    microsimulation; dynamic general equilibrium; unemployment; labour supply elasticity; tax reform;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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