Measuring the Tax Revenue Elasticity to Output in Dynamic Stochastic General Equilibrium Model
We use structural method, that is, Dynamic Stochastic General Equilibrium (DSGE) model with fiscal stabilization rules, for calculating the tax revenue elasticity rate and estimate more plausible value of it. In the short-run, the tax revenue elasticity to output takes negative value and, in medium-run, it takes quite large positive values (from 2.3 to 4) in both permanent and temporary positive productivity shocks. On the other hand, in the long-run, under permanent positive productivity shock remains nearly the value of the tax revenue elasticity converses to about 2.3. But, under temporary one, it decreases and reverses it.
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- Erceg, Christopher & Guerriei, Luca & Gust, Christopher, 2006.
"SIGMA: A New Open Economy Model for Policy Analysis,"
813, University Library of Munich, Germany.
- Christopher J. Erceg & Luca Guerrieri & Christopher Gust, 2006. "SIGMA: A New Open Economy Model for Policy Analysis," International Journal of Central Banking, International Journal of Central Banking, vol. 2(1), March.
- Christopher J. Erceg & Luca Guerrieri & Christopher J. Gust, 2006. "SIGMA: a new open economy model for policy analysis," International Finance Discussion Papers 835, Board of Governors of the Federal Reserve System (U.S.).
- Huixin Bi & Nora Traum, 2012. "Estimating Sovereign Default Risk," American Economic Review, American Economic Association, vol. 102(3), pages 161-66, May.
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