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Simulating corporate income tax reform proposals with a dynamic CGE model

Bhattarai, Keshab; Haughton, Jonathan; Head, Michael; Tuerck, David G


Jonathan Haughton

Michael Head

David G Tuerck


Opinion leaders and policy makers in the United States have turned their focus to the corporate income tax, which now has the highest statutory rate in the developed world. Using a dynamic computable general equilibrium model (the “NCPA-DCGE Model”), we simulate alternative policies for reducing the U.S. corporate income tax. We find that reductions in the corporate income tax rate result in significant positive impacts on output, investment, capital formation, employment, and household well-being (for almost all deciles). All of the hypothesized reforms also result in a more-streamlined public sector. These results are plausible insofar as the DCGE model from which they are obtained is parameterized by plausible elasticity assumptions, and incorporates the adjustments in prices, output, employment and investment that result from changes in tax policy.

Journal Article Type Article
Publication Date Apr 5, 2017
Journal International journal of economics and finance
Print ISSN 1916-971X
Electronic ISSN 1916-971X
Publisher Canadian Center of Science and Education
Peer Reviewed Peer Reviewed
Volume 9
Issue 5
Pages 20-35
APA6 Citation Bhattarai, K., Haughton, J., Head, M., & Tuerck, D. G. (2017). Simulating corporate income tax reform proposals with a dynamic CGE model. International Journal of Economics and Finance, 9(5), 20-35 .
Keywords Corporate income tax; Dynamic CGE model; US economy; Growth and redistribution
Publisher URL
Additional Information This is a copy of an article published in International journal of economics and finance, 2017, v.9 issue 5.


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Copyright Statement
Copyright for this article is retained by the author(s), with first publication rights granted to the journal. This is an open-access article distributed under the terms and conditions of the Creative Commons Attribution license (

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