The Effect of Tax Reform in a Dynamic General Equilibrium Framework - Ramsey vs. Overlapping Generation Model

DOI

10.2991/jcis.2006.162How to use a DOI?

Keywords

Tax Reform,Dynamic CGE,Overlapping generation,

Abstract

Based on a thorough comparison of the basic assumptions and economic underpinning of the Ramsey and over lapping generation (OLG) model, this study builds both static and dynamic computable general equilibrium tax policy models to analyze the effect of tax reform on Taiwan’s economy. The new tax structure considers mainly a replacement of some parts of labor and capital income taxes by consumption tax. Our simulation results show differential outcomes for static and dynamic models. The slower speed of transition inherent in OLG model has caused variables such as welfare, capital stock, and replacement consumption tax rate change less than that in the Ramsey model when the tax reform policy is imposed. And the intergeneration effects of different tax burden between young and old generations can be found in the OLG model but not in the Ramsey model.

Copyright

© 2006, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Liao Ru-min
PY  - 2006/10
DA  - 2006/10
TI  - The Effect of Tax Reform in a Dynamic General Equilibrium Framework - Ramsey vs. Overlapping Generation Model
BT  - Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06)
PB  - Atlantis Press
SP  - 648
EP  - 651
SN  - 1951-6851
UR  - https://doi.org/10.2991/jcis.2006.162
DO  - 10.2991/jcis.2006.162
ID  - Ru-min2006/10
ER  -