No description available.

This study investigates general equilibrium effects of an alternative social security policy in Indonesia. The study aims to analyse some financial issues of the proposed policy using a dynamic CGE model. The focus is investigating possible tax scenarios to finance the proposed policy and their impacts on the economy. The simulation results suggest that the consumption tax base should be used as the main financing method. This is because based on various simulations the selected consumption taxes have less negative impacts on the economy than the selected income taxes. Those selected consumption taxes more equitably distribute tax burden and improve income inequality in the long run. However, the increasing price because of this policy selection should also be considered seriously. The simulations also include the study of the demographic transition in Indonesia. A view that is common in the literature is that the rapid increase of labor force in the next three decades could raise the proportion of skilled workers in the labor force and enhance the economic growth. Instead the simulations suggest contrary results. When we repeat the tax/transfer simulations with the demographic transition, real GDP per capita and consumption per capita fall further below the baseline projections. Further simulations are conducted to investigate possible policy actions to mitigate the effects of this demographic transition. This study also covers possible allocation decision trade-offs surrounding the proposed social security policy. That is, the trade-offs between universal social pension insurance and universal social health insurance, and between universal tax-financed social security programs and other important development programs. Given the limitation of our study, that all stakeholders have agreed to develop a universal tax-financed social security program, we conclude that universal tax-financed social health insurance should be given more priority than universal tax-financed social pension insurance. The study concludes with some remarks regarding important areas for future research.

This study investigates general equilibrium effects of an alternative social security policy in Indonesia. The study aims to analyse some financial issues of the proposed policy using a dynamic CGE model. The focus is investigating possible tax scenarios to finance the proposed policy and their impacts on the economy. The simulation results suggest that the consumption tax base should be used as the main financing method. This is because based on various simulations the selected consumption taxes have less negative impacts on the economy than the selected income taxes. Those selected consumption taxes more equitably distribute tax burden and improve income inequality in the long run. However, the increasing price because of this policy selection should also be considered seriously. The simulations also include the study of the demographic transition in Indonesia. A view that is common in the literature is that the rapid increase of labor force in the next three decades could raise the proportion of skilled workers in the labor force and enhance the economic growth. Instead the simulations suggest contrary results. When we repeat the tax/transfer simulations with the demographic transition, real GDP per capita and consumption per capita fall further below the baseline projections. Further simulations are conducted to investigate possible policy actions to mitigate the effects of this demographic transition. This study also covers possible allocation decision trade-offs surrounding the proposed social security policy. That is, the trade-offs between universal social pension insurance and universal social health insurance, and between universal tax-financed social security programs and other important development programs. Given the limitation of our study, that all stakeholders have agreed to develop a universal tax-financed social security program, we conclude that universal tax-financed social health insurance should be given more priority than universal tax-financed social pension insurance. The study concludes with some remarks regarding important areas for future research.

We use a three-country, 14-sector computable general equilibrium (CGE) model to examine the effect of immigration on the labor market, production sectors and the macroeconomy of Austria and Hungary. We analyze the phenomenon of immigration in an empirical model in order to get an idea of the quantitative dimension of the economic problems involved, rather than introduce new integration theory. Our study aims more at the impact of migration than at forecasting future migration flows. (excerpt) / Series: EI Working Papers / Europainstitut

This paper investigates the potential for a carbon tax to induce R&D, and for the consequent induced technical change (ITC) to lower the macroeconomic cost of abating carbon emissions. ITC is modelled within a general equilibrium simulation of the U.S. economy by the effects of emissions restrictions on the level and composition of aggregate R&D, the accumulation of the stock of knowledge, and the industry-level reallocation and substitution of intangible services derived therefrom. Contrary to other authors, I find that ITC's impact is large, positive and dominated by the latter "substitution effect," which mitigates most of the deadweight loss of the tax. / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/). / This research was supported by the Offce of Science (BER), U.S. Department of Energy, Grant No. DE-FG02-02ER63484, and by funding from the MIT Joint Program on the Science and Policy of Global Change, which is supported by a consortium of government, industry and foundation sponsors.

Essay one develops and tests a revenue-maximizing tax structure model. This model represents one of the first attempts to evaluate and compare the responsiveness of various tax instruments to tax evasion within a tax revenue maximization framework. We use data from both the OECD and East African countries and estimation is via a seemingly unrelated regression model. The GDP share of agricultural income is used as an instrument to correct for the simultaneity between tax revenue shares and tax evasion. Our findings indicate that tax evasion increases the tax authority’s reliance on consumption taxes vis-à-vis taxes on income, suggesting that diverse tax instruments respond differently to tax evasion, and as such the choice of a revenue-maximizing tax structure is influenced by the amount of revenue lost through tax evasion. Essay two analyzes the incidence of tax evasion in both the formal and informal sectors of the economy using a computable general equilibrium model. This essay incorporates the element of uncertainty in an individual’s decision to evade so as to account for the uncertainty of returns to the tax evader. We also allow for varying degrees of competi¬tion or entry across sectors in the economy to examine how much of the tax advantage is retained by the initial evaders and how much is shifted via factor and commodity price changes. Our simulation results show that the evading households’ post-evasion welfare is only 0.68-3.40 percent higher than the post-tax welfare if it had fully complied with taxes. The simulation results further reveal that the evading household keeps 77.1-83.2 percent of this initial increase in welfare, while 16.8-22.9 percent of this initial gain is competed away as a result of increased competition and entry into the informal sector. The compliant households’ welfare increases by 58.8-101.7 percent with increased competition in the informal sector. Therefore, if we construe the changes in consumer welfare as an overall indicator of the gains and/or losses from tax evasion, then the evading household only benefits marginally and this advantage diminishes with increased entry or competition in the informal sector.

This thesis extends the literature on trade-linked international environmental policy by quantifying the effects of collective taxes on polluting intermediate inputs under varying trade, market structure and labour market assumptions. Using a CGE model augmented to include emissions from intermediate inputs, I simulate the effects of coordinated and harmonized environmental taxes on output, trade, and market structure. The main objectives are to ascertain whether free trade improves regulatory policy outcomes, and to demonstrate how market structure and the relative size of trading partners affect policy responses. To this end, I consider three cases: (a) asymmetric regions competing under perfect competition (b) asymmetric regions competing under imperfect competition and (c) symmetric regions competing under imperfect competition. Using Canada-EU and NAFTA-EU trade to represent asymmetric and symmetric trade ties, the results reveal the following: When regions are asymmetric, free trade unambiguously improves regulatory outcomes for the EU, but yields mixed results for Canada. In addition, regulatory costs are lower when trading partners are symmetric. However, free trade can result in perverse outcomes. For asymmetric regions, output and market structure changes are stronger under imperfect competition, and in the presence of real wage unemployment. Results also suggest that aggregate trade flows are not very sensitive to environmental taxes but are sensitive to changes in border taxes. Finally, welfare effects do not follow a predictable pattern because they partly depend on market structure changes.

Despite the prevalence of computable general equilibrium (CGE) models applied to tax changes of varying types, little work has been done focusing on state level comprehensive tax reform or on tax reform in countries undergoing a regime change. This research develops and applies methodologies for analyzing fiscal policy changes under these two very different economic scenarios. The findings for each application are relevant to policy makers as they weigh the effects of tax reform. The models developed for the two scenarios offer guidance to future modelers in studying similar economies and the contrast of the two provides a framework for thinking about model design and application. Finally, the results, when compared to each other, allow us to see the relative effectiveness of the two tax reform policies given their very different economies.

The purpose of this thesis is to assess the effects of China???s growth, investment in higher education and trade liberalisation on China and its neighbouring East Asian economies. The study is conducted within the framework of a dynamic multi-sector, multi-region computational general equilibrium model, which incorporates endogenous capital and skill accumulation. China???s trade liberalisation induces substantial investment spending and accumulation of capital and skilled labour in China and East Asia. There is a positive wage outcome for skilled and unskilled labour in both regions. The expanded trade opportunities with China should compensate East Asia for the loss of exports to the rest of the world. Complementarity exists between the exports of China and East Asia with East Asia supplying China???s skill-intensive manufacturing sectors with components and parts which are then used as inputs into China???s exports. Furthermore, the simulation results indicate that China???s trade reforms will support the industrial upgrading process in China but the impact is more apparent in the long term. As China transforms into a more skill oriented, open and competitive economy, it will impose significant structural adjustments on itself and East Asia. A large increase in the output and exports of low tech manufacturing is seen in China, as well as in the high skill sectors of intermediate manufacturing, durables and traded services. China???s exports and imports surge, further rising its presence in the global trading system. The exports of East Asia to the rest of the world decline across the sectors except for the durables sector. However, the decline in the exports of several sectors in East Asia to the rest of the world was offset by the increase in the exports of these sectors to China.

O debate sobre a desindustrialização brasileira é bastante denso e ainda inconclusivo, embora haja algum consenso entre as diferentes vertentes econômicas de que o setor manufatureiro tem passado por dificuldades, principalmente após a crise financeira de 2008. Tendo este cenário em vista, o governo atuou na tentativa de restaurar a atividade industrial com algumas medidas de estímulo ao setor e através de políticas macroeconômicas (câmbio e juros). Nesse contexto, o presente trabalho investiga os impactos econômicos dessas políticas - redução da taxa de juros, desoneração da folha de pagamentos, redução do IPI, restrição ao fluxo de capitais estrangeiros (elevação do IOF) e redução da tarifa de energia elétrica - sobre a produção, o bem-estar, o consumo, entre outras variáveis macroeconômicas e setoriais. Além disso, busca-se analisar outras duas medidas alternativas - subsídio ao setor de transportes e reforma tributária, comparando seus resultados com aqueles obtidos pela avaliação das medidas já adotadas pelo governo. Para tanto, utiliza-se um modelo de Equilíbrio Geral Computável (EGC) calibrado para o ano de 2009, com o intuito de estudar cenários de adoção dessas políticas e contribuir para a literatura econômica de forma mais objetiva. Os resultados obtidos pela modelagem indicam que é possível afirmar que muitas das medidas implementadas mostram-se adequadas para o contexto da economia brasileira no pós-crise, seja pelos benefícios setoriais associados a um maior nível tecnológico da produção quanto pelos resultados macroeconômicos de reanimar a atividade econômica. As medidas de redução na taxa de juros (Selic e TJLP) e reforma tributária neutra que considera a substituição dos impostos intermediários pelo VAT são capazes de elevar o PIB e o bem-estar e ainda melhorar a composição setorial da produção e exportação, sem que a atividade do governo seja negativamente afetada. Outras medidas, como a desoneração da folha de pagamentos, reforma tributária com redução da receita fiscal, e a redução no IPI também trazem bons resultados, mas não se sustentam no longo prazo se não houver mudança na eficiência dos gastos públicos, uma vez que todas geram queda na atividade do governo. No sentido contrário, as medidas de subsídio ao setor de transporte, de redução da tarifa de energia elétrica e redução do fluxo de capitais externos, que implicam na atuação do governo sobre o livre funcionamento do mercado, geraram resultados indesejados no que diz respeito a um menor estímulo a indústrias de maior conteúdo tecnológico, além de não reverterem a perda de participação da indústria no emprego e no PIB. / Brazilian deindustrialization debate is quite dense and still inconclusive, although there is some consensus on the manufacturing struggle among different economic approaches, especially after the 2008 financial crisis. Considering this scenario, the government has been acting in an attempt to restore industrial activity by granting stimuli focused on the manufacturing sector and curbing currency appreciation. In this context, this study aims to investigate the economic impacts of these policies on GDP, welfare, consumption and macroeconomic and sectorial variables. Furthermore, alternative policies were considered, in order to compare the results with those obtained through the evaluation of effective government policies. Therefore, we apply a Computable General Equilibrium (CGE) model, updated for 2009, in order to study the effects of adopting these polices and contribute to the economic literature concerning this subject. The results indicate that it is possible to affirm that most measures are appropriate to help Brazilian economy after the crisis, both by sector benefits associated with a higher technological level of production and by improving macroeconomic outcomes. Measures to reduce interest rate (Selic and TJLP) and neutral tax reform that considers the replacement of intermediaries tax by VAT are able to raise GDP and welfare and to further improve the sectoral composition of production and export, without adversely affecting government activity. Other measures, such as payroll exemptions, tax reform with reduction of the fiscal income, and IPI reduction also bring good results, but would hardly be maintained in long term if there is no change in public spending efficiency, since all have negative impacts on government activity. On the contrary, subsidies to the transport sector, cuts in electricity rates and restriction to foreign capital inflow, which reflect government action on free market functioning, led to undesirable results in the context of raising technological level of the Brazilian production and reverse industry participation loss in employment and GDP.