Multi-sectoral multi-household general equilibrium tax model: An application

Bhattarai, Keshab R.

Abstract

We present a general equilibrium tax model with four production sectors and three households with a government that collects taxes on capital income, household income and commodities and redistributes income by transferring tax revenue to households. Labour supply is assumed to be exogenous in the first model but endogenous in the second one. We show how tax reforms can create efficiency gains as well as re-allocation and redistribution impacts on an economy. Numerical example shows that economy-wide efficiency gains up to 2.4% of the base year GDP, gains of up to 29% to household 1 who pays higher taxes in the base year and loss of up to 22% to household 2 who loses transfers after the reform and re-allocation of labour and capital input across all sectors.

Citation

Bhattarai, K. R. (2004). Multi-sectoral multi-household general equilibrium tax model: An application. Problems and Perspectives in Management, 2(3), 216-241

• Journal Article Type: Article
• Online Publication Date: Nov 12, 2004
• Publication Date: Jan 1, 2004
• Deposit Date: Feb 16, 2021
• Publicly Available Date: Feb 18, 2021
• Journal: Problems and Perspectives in Management
• Print ISSN: 1727-7051
• Publisher: Business Perspectives
• Peer Reviewed: Peer Reviewed
• Volume: 2
• Issue: 3
• Pages: 216-241
• Keywords: General equilibrium; Economic welfare; Tax model
• Public URL: https://hull-repository.worktribe.com/output/3564554
• Publisher URL: https://businessperspectives.org/journals/problems-and-perspectives-in-management/issue-3/multi-sectoral-multi-household-general-equilibrium-tax-model-an-application