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Parametric and Non-Parametric Approaches to Price and Tax Reform

Author

Listed:
  • Angus Deaton
  • Serena Ng

Abstract

In the analysis of tax reform, when equity is traded off against efficiency, the measurement of the latter requires us to know how tax- induced price changes affect quantities supplied and demanded. In this paper, we present various econometric procedures for estimating how taxes affect demand. We examine advantages and disadvantages of parametric methods of tax reform analysis and suggest that the nonparametric `average derivate estimator' is a useful alternative. We apply both parametric and nonparametric methods to analyze possible price reform for foods in rural Pakistan, and discuss the issues that remain to be dealt with in empirical welfare analyses.

Suggested Citation

  • Angus Deaton & Serena Ng, 1996. "Parametric and Non-Parametric Approaches to Price and Tax Reform," NBER Working Papers 5564, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5564
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    Cited by:

    1. Maura P. Doyle, 1997. "The effects of interest rates and taxes on new car prices," Finance and Economics Discussion Series 1997-38, Board of Governors of the Federal Reserve System (US).
    2. Nakar Djindil Syntiche & Tabo Symphorien Ndang & Toinar Mogota Anatole, 2007. "A qui profitent les dépenses sociales au Tchad? Une analyse d'incidence à partir des données d'enquête," Working Papers PMMA 2007-11, PEP-PMMA.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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