Impacts on Output and Welfare of Tax Reforms in the Multi-sector Multi- household Dynamic CGE Model of the Nepalese Economy, 2020-2040

Bhattarai, Keshab; Pandit, Binayak

Abstract

A dynamic Computable General Equilibrium (CGE) model is constructed to measure the impacts of tax reforms on Nepalese economy benchmarked on micro-consistent data set created from the input output table of Nepal for 2017 (ADB 2017). Impacts of tax reforms on welfare of households and output levels of industries are very positive. The model also shows a dynamic process of economic growth with redistribution. All households get welfare increase but richer households get more than poor households in our analysis. This gap means policy should promote equitable economic growth to increase overall welfare of households. Analysis of dynamic CGE model results from 2020 to 2040 show possibility of targeting redistribution adequately ensuring economic growth across all sectors of the economy.

Citation

Bhattarai, K., & Pandit, B. (2025). Impacts on Output and Welfare of Tax Reforms in the Multi-sector Multi- household Dynamic CGE Model of the Nepalese Economy, 2020-2040. Journal of Development Economics and Finance, 6(1), 19-41. https://doi.org/10.47509/JDEF.2025.v06i01.02

• Journal Article Type: Article
• Acceptance Date: Feb 18, 2025
• Online Publication Date: May 30, 2025
• Publication Date: Jun 5, 2025
• Deposit Date: Jun 4, 2025
• Publicly Available Date: Jun 27, 2025
• Journal: Journal of Development Economics and Finance
• Electronic ISSN: 2582-5194
• Publisher: ARF India
• Peer Reviewed: Peer Reviewed
• Volume: 6
• Issue: 1
• Pages: 19-41
• DOI: https://doi.org/10.47509/JDEF.2025.v06i01.02
• Keywords: Dynamic CGE model of Nepal; tax policy; economic growth JEL Classification: C6; D6; E2 and O21
• Public URL: https://hull-repository.worktribe.com/output/5234450
• Publisher URL: https://www.arfjournals.com/image/catalog/Journals%20Papers/JDEF/2025/No%201%20(2025)/2_Keshab%20Bhattarai.pdf