UK Tax Policy and Applied General Equilibrium Analysis

✍ Scribed by John Piggott, John Whalley

• Publisher: Cambridge University Press
• Year: 2009
• Tongue: English
• Leaves: 355
• Category: Library

✦ Synopsis

At the time of this volume's publication in 1985, general equilibrium modelling had become a significant area of applied economic research. Its focus was to develop techniques to facilitate economy-wide quantitative assessment of allocative and distributional impacts on policy changes. UK Tax Policy and Applied General Equilibrium Analysis was the first book-length treatment of the development and application of an applied general equilibrium model of the Walrasian type, constructed to analyse UK taxation and subsidy policy. As a whole, UK Tax Policy and Applied General Equilibrium Analysis offers the reader two things. First, it gives a detailed account of the development of an applied general equilibrium model of the UK. Second, it provides results of model experiments which have been designed to inform the policy debate, not only in the UK but also in other countries. It should thus be of interest to both researchers and students undertaking research in the applied general equilibrium area and to policy makers concerned with tax reform.

✦ Table of Contents

Cover......Page 1
Frontmatter......Page 2
Contents......Page 8
PREFACE......Page 12
ACKNOWLEDGEMENTS......Page 14
INTRODUCTION AND SUMMARY OF STUDY......Page 16
PART I - The General Equilibrium Model of the UK -- Structure, Data and Model Solution.......Page 31
1.1 General Equilibrium Analysis of Taxes in a Computational Framework......Page 32
1.2 General Equilibrium Analysis of Complete Tax/Subsidy Systems......Page 38
1.3 Equal Tax Yield Comparisons Between General Equilibria......Page 42
1.4 Partition of the Commodities into Goods and Factors in General Equilibrium Models......Page 44
1.5 Computational Solution of General Equilibrium Tax Policy Models......Page 45
2.1 An Overview of the Basic Variant Model......Page 50
2.2 The Industrial Sector......Page 53
2.3 The Personal Sector......Page 58
2.4 Treatment of Investment Expenditures in the Basic Variant Model......Page 60
2.5 The Public Sector......Page 64
2.6 The External Sector......Page 68
2.7 Equilibrium Solutions for the Model......Page 70
2.8 Dating the Model......Page 72
3.1 An Overview of the 1973 Tax/Subsidy System in the Model......Page 79
3.2 The 1973 UK Tax System......Page 84
3.3 The 1973 UK Subsidy System......Page 96
3.4 The Treatment of Public Sector Expenditures......Page 101
3.5 An Initial Overview of the Impact of the 1973 UK Tax/Subsidy System......Page 103
3.6 Developments in UK Taxes and Subsidies between 1973 and 1980......Page 107
CHAPTER 4 - Calibrating the model......Page 114
4.1 The Choice of Functional Forms for the Behavioral Equations in the Model......Page 115
4.2 Alternative Approaches to Parameter Selection......Page 116
4.3 The Construction of a Benchmark Equilibrium Data Set......Page 118
4.4 Units Conventions and the Use of the Benchmark Equilibrium Data Set......Page 121
4.5 Consistency Adjustments in the Construction of a Benchmark Equilibrium......Page 122
4.6 Determining Parameter Values from the Benchmark Equilibrium Data Set......Page 125
CHAPTER 5 - Benchmark Equilibrium Data Set......Page 134
5.1 Profit Type Return by Industry......Page 139
5.2 Return to Labour by Industry......Page 143
5.3 Taxes and Subsidies on the Return to Labour and the Profit Type Return......Page 147
5.5 Demands for Commodities......Page 148
5.7 Consumer Incomes and Income Taxes......Page 152
5.9 The Public Sector Accounts for the Year 1973......Page 158
5.10 Sources of Income by Sector and Treatment of Financial Transactions......Page 163
6.1 Production Function Elasticities......Page 167
6.2 Demand Function Elasticities......Page 170
6.3 Trade Elasticities......Page 180
6.4 Elasticity Values and the Labour/Leisure Choice......Page 185
6.5 Elasticities and Savings Decisions......Page 187
6.6 Elasticities in the Public Good Model Variant......Page 189
PART II - Empirical Analysis of the UK Tax/Subsidy System Using the General Equilibrium Model......Page 192
7.1 Introduction......Page 195
7.2 Aggregate Welfare Analysis of the Central Case......Page 196
7.3 Detailed Impacts on Household Groups for the Central Case Analysis......Page 205
7.4 Price and Quantity Adjustments Associated with the Central Case......Page 216
7.5 Additional Analyses in the Central Case......Page 232
7.6 Summary of Main Findings in Chapter 7......Page 237
8.2 Model-Type Taxes and Legal Tax Instruments......Page 240
8.3 The Relationship of Results in 8.2 to Other Studies of Tax Subsidy Distortions......Page 257
8.4 Increasing Personal Tax Progressivity......Page 264
8.5 Restructuring Consumer Prices in Order to Redistribute Income......Page 265
8.6 Industrial Policies and the Tax System......Page 271
8.7 The Effects of Changing the Balance Between Direct and Indirect Taxation......Page 273
8.8 Summary of Findings of Chapter 8......Page 275
9.2 Tax Distortions and Labour Supply......Page 278
9.3 Tax Distortion of Savings......Page 280
9.4 Inflation and Distortion of the Tax System......Page 294
9.5 Transfers and Welfare Reform......Page 300
9.6 Public Provision: Equilibria with Public Goods and Distorting Taxes and Subsidies......Page 301
9.7 A Reverse Analysis of the 1973 Tax Reform......Page 309
9.8 Summary......Page 312
SUMMARY AND CONCLUSIONS......Page 315
APPENDIX A - Structure of the Basic Variant Model......Page 318
APPENDIX B - Notes to Tables Appearing in Chapter 5......Page 323
APPENDIX C - Notes on Programming and Computation......Page 337
BIBLIOGRAPHY......Page 343