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Is A Tax Cut On Cultural Goods Consumption Actually Desirable?:A Microsimulation Analysis

Author

Listed:
  • Juan Prieto-Rodriguez

    (Universidad de Oviedo & IEF)

  • Desiderio Romero-Jordan

    (IEF & Universidad Rey Juan Carlos)

  • Jose Felix Sanz-Sanz

    (IEF & Universidad Complutense de Madrid)

Abstract

Proposals for tax cuts on cultural goods represent an ongoing debate in cultural policy. The main aim of this paper is to shed some light on this debate using microsimulation tools. First, we have estimated an Almost Ideal Demand System for nineteen different groups of goods, including cultural goods. Expenditure and price elasticities have been obtained from this model. Using this information, three alternatives cuts in the V.A.T. rate on cultural goods have been microsimulated and evaluated in terms of revenue and welfare. These types of fiscal reforms will lead to welfare and efficiency gains that can be described as regressive.

Suggested Citation

  • Juan Prieto-Rodriguez & Desiderio Romero-Jordan & Jose Felix Sanz-Sanz, 2004. "Is A Tax Cut On Cultural Goods Consumption Actually Desirable?:A Microsimulation Analysis," Public Economics 0402001, EconWPA, revised 06 Feb 2004.
  • Handle: RePEc:wpa:wuwppe:0402001
    Note: Type of Document - pdf; prepared on WinXP; pages: 23
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    File URL: http://econwpa.repec.org/eps/pe/papers/0402/0402001.pdf
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    References listed on IDEAS

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    1. Martin Browning & M. Dolores Collado, 2001. "The Response of Expenditures to Anticipated Income Changes: Panel Data Estimates," American Economic Review, American Economic Association, vol. 91(3), pages 681-692, June.
    2. Blundell, Richard, 1988. "Consumer Behaviour: Theory and Empirical Evidence--a Survey," Economic Journal, Royal Economic Society, vol. 98(389), pages 16-65, March.
    3. Louis Lévy-Garboua & Claude Montmarquette, 1996. "A microeconometric study of theatre demand," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 20(1), pages 25-50, March.
    4. John Creedy, 1999. "Modelling Indirect Taxes and Tax Reform," Books, Edward Elgar Publishing, number 1940.
    5. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
    6. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, April.
    7. Cathal O'Donoghue, 2001. "Dynamic Microsimulation: A Methodological Survey," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 4(2), December.
    8. 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. Nisreen Salti & Jad Chaaban, 2009. "The Poverty and Equity Implications of A Rise in the Value Added Tax: A Microeconomic Simulation for Lebanon," Working Papers 483, Economic Research Forum, revised Apr 2009.

    More about this item

    Keywords

    Microsimulation; tax reforms; cultural consumption; welfare;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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