Measuring the Deadweight Loss from Taxation in a Small Open Economy. A general method with an application to Sweden
The paper develops a simple general equilibrium framework for calculating the marginal deadweight loss from taxation in a small open economy. The framework allows a decomposition of the deadweight loss from each tax instrument into the losses stemming from the contraction of the different tax bases. The paper describes a method of calibrating the model which exploits the links between the various factor supply elasticities implied by the standard life cycle model. It also develops a method of estimating effective tax rates that is consistent with optimising household and firm behaviour. To illustrate how the model works, it is calibrated to a data set for Sweden. The quantitative results highlight the importance of accounting for the interaction between the major tax bases when estimating deadweight loss.
|Date of creation:||Oct 2011|
|Contact details of provider:|| Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark|
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Blomquist, Sören & Selin, Håkan, 2008.
"Hourly Wage Rate and Taxable Labor Income Responsiveness to Changes in Marginal Tax Rates,"
Working Paper Series, Center for Fiscal Studies
2009:1, Uppsala University, Department of Economics.
- Blomquist, Sören & Selin, Håkan, 2010. "Hourly wage rate and taxable labor income responsiveness to changes in marginal tax rates," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 878-889, December.
- Sören Blomquist & Håkan Selin, 2009. "Hourly Wage Rate and Taxable Labor Income Responsiveness to Changes in Marginal Tax Rates," CESifo Working Paper Series 2644, CESifo Group Munich.
- Blomquist, Sören & Selin, Håkan, 2008. "Hourly Wage Rate and Taxable Labor Income Responsiveness to Changes in Marginal Tax Rates," Working Paper Series 2008:16, Uppsala University, Department of Economics.
- Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985.
"A General Equilibrium Model for Tax Policy Evaluation,"
National Bureau of Economic Research, Inc, number ball85-1, Enero.
- Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226036335.
- Assaf Razin & Efraim Sadka, 1989.
"International Tax Competition and Gains from Tax Harmonization,"
NBER Working Papers
3152, National Bureau of Economic Research, Inc.
- Razin, Assaf & Sadka, Efraim, 1991. "International tax competition and gains from tax harmonization," Economics Letters, Elsevier, vol. 37(1), pages 69-76, September.
- Feldstein, Martin S, 1978. "The Rate of Return, Taxation and Personal Savings," Economic Journal, Royal Economic Society, vol. 88(351), pages 482-487, September.
- Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, vol. 76(5), pages 1086-1102, December.
- Emmanuel Saez, 2000.
"The Desirability of Commodity Taxation under Non-Linear Income Taxation and Heterogeneous Tastes,"
NBER Working Papers
8029, National Bureau of Economic Research, Inc.
- Saez, Emmanuel, 2002. "The desirability of commodity taxation under non-linear income taxation and heterogeneous tastes," Journal of Public Economics, Elsevier, vol. 83(2), pages 217-230, February.
- Shoven, John B. & Whalley, John, 1972.
"A general equilibrium calculation of the effects of differential taxation of income from capital in the U.S,"
Journal of Public Economics,
Elsevier, vol. 1(3-4), pages 281-321, November.
- John B. Shoven & John Whalley, 1972. "A General Equilibrium Calculation of the Effects of Differential Taxation of Income from Capital in the U.S," Cowles Foundation Discussion Papers 328, Cowles Foundation for Research in Economics, Yale University.
- James R. Hines, Jr., 1998.
"Three Sides of Harberger Triangles,"
NBER Working Papers
6852, National Bureau of Economic Research, Inc.
- Diewert, W Erwin, 1983. " The Measurement of Waste within the Production Sector of an Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(2), pages 159-179.
- Lawrence H. Goulder & Roberton C. Williams III, 2003. "The Substantial Bias from Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 898-927, August.
- Blinder, Alan S, 1975. "Distribution Effects and the Aggregate Consumption Function," Journal of Political Economy, University of Chicago Press, vol. 83(3), pages 447-475, June.
- Sandmo, Agnar, 1974. "A Note on the Structure of Optimal Taxation," American Economic Review, American Economic Association, vol. 64(4), pages 701-706, September.
- Hansson, Ingemar, 1984. " Marginal Cost of Public Funds for Different Tax Instruments and Government Expenditures," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(2), pages 115-130.
- E. Philip Howrey & Saul H. Hymans, 1978. "The Measurement and Determination of Loanable-Funds Saving," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(3), pages 655-685.
When requesting a correction, please mention this item's handle: RePEc:kud:epruwp:11-03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann)
If references are entirely missing, you can add them using this form.