IDEAS home Printed from https://ideas.repec.org/p/ltv/wpaper/202302.html
   My bibliography  Save this paper

The New Version of Latvian CGE Model

Author

Listed:
  • Konstantins Benkovskis

    (Latvijas Banka)

  • Olegs Matvejevs

    (Latvijas Banka)

Abstract

This paper describes the new version of Latvian CGE model, which is now an integral part of the joint CGE-EUROMOD modelling system. Special attention is devoted to the labour market and consumption blocks of CGE that are substantially improved compared with the previous version. We briefly describe the motivation to link Latvian CGE with Latvian EUROMOD and provide major technical details. We also provide an example of the policy simulation by the joint CGE-EUROMOD system, demonstrating how the introduction of the progressive personal income tax rate affected the Latvian economy at macro, industry and micro level.

Suggested Citation

  • Konstantins Benkovskis & Olegs Matvejevs, 2023. "The New Version of Latvian CGE Model," Working Papers 2023/02, Latvijas Banka.
    • Handle: RePEc:ltv:wpaper:202302
    as

    Download full text from publisher

    File URL: https://datnes.latvijasbanka.lv/papers/WP_2-2023.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nicolas Gavoille & Anna Zasova, 2021. "What we pay in the shadow: Labor tax evasion, minimum wage hike and employment," Working Papers CEB 21-017, ULB -- Universite Libre de Bruxelles.
    2. Xavier Jara Tamayo, Holguer & Simon, Agathe, 2021. "The income protection role of an EMU-wide unemployment insurance system: the case of atypical workers," EUROMOD Working Papers EM6/21, EUROMOD at the Institute for Social and Economic Research.
    3. Luc Savard, 2010. "Scaling up infrastructure spending in the Philippines: A CGE top-down bottom-up microsimulation approach," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 43-59.
    4. Powell, Alan A. & McLaren, Keith R. & Pearson, K.R. & Rimmer, Maureen T., 2002. "Cobb-Douglas Utility - Eventually!," Conference papers 330977, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Zodrow, George R. & Diamond, John W., 2013. "Dynamic Overlapping Generations Computable General Equilibrium Models and the Analysis of Tax Policy: The Diamond–Zodrow Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 743-813, Elsevier.
    6. James Giesecke & Nhi Hoang Tran, 2012. "A general framework for measuring VAT compliance rates," Applied Economics, Taylor & Francis Journals, vol. 44(15), pages 1867-1889, May.
    7. Peter B. Dixon & Maureen T. Rimmer, 2003. "A New Specification of Labour Supply in the MONASH Model with an Illustrative Application," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(1), pages 22-40, March.
    8. Summers, Lawrence H, 1981. "Capital Taxation and Accumulation in a Life Cycle Growth Model," American Economic Review, American Economic Association, vol. 71(4), pages 533-544, September.
    9. Salvador Barrios & Mathias Dolls & Anamaria Maftei & Andreas Peichl & Sara Riscado & Janos Varga & Christian Wittneben, 2019. "Dynamic Scoring Of Tax Reforms In The European Union," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(1), pages 239-262, January.
    10. Andreas Peichl, 2009. "The Benefits and Problems of Linking Micro and Macro Models — Evidence from a Flat Tax Analysis," Journal of Applied Economics, Taylor & Francis Journals, vol. 12(2), pages 301-329, November.
    11. Jussila, Mira & Tamminen, Saara & Kinnunen, Jouko, 2012. "The estimation of LES demand elasticities for CGE models," Working Papers 39, VATT Institute for Economic Research.
    12. 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.
    13. Giesecke, James A. & Nhi, Tran Hoang, 2010. "Modelling value-added tax in the presence of multi-production and differentiated exemptions," Journal of Asian Economics, Elsevier, vol. 21(2), pages 156-173, April.
    14. Peter B. Dixon & Maureen T. Rimmer, 2006. "The Displacement Effect of Labour‐Market Programs: MONASH Analysis," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages 26-40, September.
    15. Anna Pluta & Anna Zasova, 2017. "Latvia Stumbling Towards Progressive Income Taxation: Episode II," SSE Riga/BICEPS Occasional Papers 10, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    16. Konstantins Benkovskis & Santa Berzina & Liva Zorgenfreija, 2016. "Evaluation of Latvia’s re-exports using firm-level trade data," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 16(1), pages 1-20.
    17. Anna Pluta & Anna Zasova, 2018. "Distributional effects of recent benefit and tax reforms in Latvia," SSE Riga/BICEPS Occasional Papers 11, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    18. Pyatt, Graham, 1988. "A SAM approach to modeling," Journal of Policy Modeling, Elsevier, vol. 10(3), pages 327-352.
    19. Dixon, Peter B. & Koopman, Robert B. & Rimmer, Maureen T., 2013. "The MONASH Style of Computable General Equilibrium Modeling: A Framework for Practical Policy Analysis," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 23-103, Elsevier.
    20. Putniņš, Tālis J. & Sauka, Arnis, 2015. "Measuring the shadow economy using company managers," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 471-490.
    21. Falk, Martin & Koebel, Bertrand M., 1997. "The Demand of Heterogeneous Labour in Germany," ZEW Discussion Papers 97-28, ZEW - Leibniz Centre for European Economic Research.
    22. Konstantins Benkovskis & Eduards Goluzins & Olegs Tkacevs, 2016. "CGE model with fiscal sector for Latvia," Working Papers 2016/01, Latvijas Banka.
    23. Nicolas Hérault, 2010. "Sequential linking of Computable General Equilibrium and microsimulation models: a comparison of behavioural and reweighting techniques," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 35-42.
    24. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 4-26.
    25. Jason DeBacker & Richard W. Evans & Kerk L. Phillips, 2019. "Integrating Microsimulation Models of Tax Policy into a DGE Macroeconomic Model," Public Finance Review, , vol. 47(2), pages 207-275, March.
    26. Robinson, Sherman & Roland-Holst, David W., 1988. "Macroeconomic structure and computable general equilibrium models," Journal of Policy Modeling, Elsevier, vol. 10(3), pages 353-375.
    27. Claudio Socci & Francesco Felici & Rosita Pretaroli & Francesca Severini & Renato Loiero, 2021. "The Multisector Applied Computable General Equilibrium Model for Italian Economy (MACGEM-IT)," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(1), pages 109-127, March.
    28. Xuejin Zuo & Xiujian Peng & Xin Yang & Philip Adams & Meifeng Wang, 2020. "Population Ageing and the Impact of Later Retirement on the Pension System in China: An Applied Dynamic General Equilibrium Analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-303, Victoria University, Centre of Policy Studies/IMPACT Centre.
    29. Fehr, Hans & Jokisch, Sabine & Kallweit, Manuel & Kindermann, Fabian & Kotlikoff, Laurence J., 2013. "Generational Policy and Aging in Closed and Open Dynamic General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1719-1800, Elsevier.
    30. Luca Tiberti & Martin Cicowiez & John Cockburn, 2018. "A Top-Down with Behaviour (TDB) Microsimulation Toolkit for Distributive Analysis," International Journal of Microsimulation, International Microsimulation Association, vol. 11(2), pages 191-213.
    31. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1645-1718, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Konstantins Benkovskis & Ludmila Fadejeva & Anna Pluta & Anna Zasova, 2023. "Keeping the best of two worlds: Linking CGE and microsimulation models for policy analysis," Working Papers 2023/01, Latvijas Banka.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Konstantins Benkovskis & Ludmila Fadejeva & Anna Pluta & Anna Zasova, 2023. "Keeping the best of two worlds: Linking CGE and microsimulation models for policy analysis," Working Papers 2023/01, Latvijas Banka.
    2. Konstantins Benkovskis & Eduards Goluzins & Olegs Tkacevs, 2016. "CGE model with fiscal sector for Latvia," Working Papers 2016/01, Latvijas Banka.
    3. D'ANDRIA Diego & DEBACKER Jason & EVANS Richard W. & PYCROFT Jonathan & ZACHLOD-JELEC Magdalena, 2021. "Taxing income or consumption: macroeconomic and distributional effects for Italy," JRC Working Papers on Taxation & Structural Reforms 2021-13, Joint Research Centre.
    4. Andreas Peichl, 2016. "Linking Microsimulation and CGE models," International Journal of Microsimulation, International Microsimulation Association, vol. 9(1), pages 167-174.
    5. Diego d'Andria & Jason DeBacker & Richard Evans & Jonathan Pycroft & Magdalena Zachlod-Jelec, 2019. "Micro-founded tax policy effects in a heterogenenous-agent macro-model," JRC Working Papers on Taxation & Structural Reforms 2019-01, Joint Research Centre.
    6. Jason Nassios & John Madden & James Giesecke & Janine Dixon & Nhi Tran & Peter Dixon & Maureen Rimmer & Philip Adams & John Freebairn, 2019. "The economic impact and efficiency of state and federal taxes in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-289, Victoria University, Centre of Policy Studies/IMPACT Centre.
    7. Norbert Švarda & Jana Valachyová & Matúš Senaj & Michal Horváth & Zuzana Siebertová, 2018. "The end of the flat tax experiment in Slovakia: An evaluation using behavioural microsimulation linked with a dynamic macroeconomic framework," Discussion Papers 50, Central European Labour Studies Institute (CELSI).
    8. Magdalena Zachlod-Jelec & Magdalena Zachlod-Jelec & Anamaria Maftei & Jonathan Pycroft, 2017. "Combining micro- and macroeconomic approach to simulate labour tax wedge cut in Italy," EcoMod2017 10321, EcoMod.
    9. John W. Diamond & George R. Zodrow, 2013. "Promoting Growth, Maintaining Progressivity, and Dealing with the Fiscal Crisis," Public Finance Review, , vol. 41(6), pages 852-884, November.
    10. Horváth, Michal & Senaj, Matúš & Siebertová, Zuzana & Švarda, Norbert & Valachyová, Jana, 2019. "The end of the flat tax experiment in Slovakia: An evaluation using behavioural microsimulation in a dynamic macroeconomic framework," Economic Modelling, Elsevier, vol. 80(C), pages 171-184.
    11. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1645-1718, Elsevier.
    12. Michal Horvath & Matus Senaj & Zuzana Siebertova & Norbert Svarda, 2015. "The End of the Flat Tax Experiment in Slovakia," Discussion Papers 15/12, Department of Economics, University of York.
    13. Michael Christl & Silvia Poli & Tine Hufkens & Andreas Peichl & Mattia Ricci, 2023. "The role of short-time work and discretionary policy measures in mitigating the effects of the COVID-19 crisis in Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 1107-1136, August.
    14. Rachel Moore & Brandon Pecoraro, 2021. "A Tale of Two Bases: Progressive Taxation of Capital and Labor Income," Public Finance Review, , vol. 49(3), pages 335-391, May.
    15. Gavoille, Nicolas & Zasova, Anna, 2021. "Foreign ownership and labor tax evasion: Evidence from Latvia," Economics Letters, Elsevier, vol. 207(C).
    16. Rachel Moore & Brandon Pecoraro, 2020. "Dynamic Scoring: An Assessment of Fiscal Closing Assumptions," Public Finance Review, , vol. 48(3), pages 340-353, May.
    17. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2015. "The own-wage elasticity of labor demand: A meta-regression analysis," European Economic Review, Elsevier, vol. 80(C), pages 94-119.
    18. Guilhoto, Joaquim J.M., 1995. "Um modelo computável de equilíbrio geral para planejamento e análise de políticas agrícolas (PAPA) na economia brasileira [A computable general equilibrium model for planning and analysis of agricu," MPRA Paper 42349, University Library of Munich, Germany.
    19. Guilhoto, Joaquim José Martins, 2011. "Análise de Insumo-Produto: Teoria e Fundamentos [Input-Output Analysis: Theory and Foundations]," MPRA Paper 32566, University Library of Munich, Germany.
    20. Turdyeva, Natalia, 2019. "Effects of a terms of trade shock on the Russian economy," Conference papers 333094, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    Keywords

    CGE model; Latvia; labour market; consumption; EUROMOD;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ltv:wpaper:202302. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Konstantins Benkovskis (email available below). General contact details of provider: https://edirc.repec.org/data/bolgvlv.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.