Title: Building a Computable General Equilibrium Tax Model for Italy
Citation: APPLIED ECONOMICS vol. 51 no. 56 p. 6009-6020
Publication Year: 2019
JRC N°: JRC117203
ISSN: 0003-6846 (online)
URI: https://www.tandfonline.com/doi/full/10.1080/00036846.2019.1646875
DOI: 10.1080/00036846.2019.1646875
Type: Articles in periodicals and books
Abstract: In this paper we develop a multi-sectoral computable general equilibrium tax model for Italy allowing for a number of fiscal tools. We illustrate the methodology for modelling and accommodating the full range of direct and indirect taxes into the national general equilibrium model. In particular, we build a commodity tax matrix by commodity, source, user and tax type; and a production tax matrix by industry and tax type. We also put a special emphasis on the institutional sector accounts, incorporating a detailed system of equations. Our model provides a powerful tool for acquiring new insights in fiscal policy analysis, through the assessment of tailored tax reforms, which can consist of either changes in tax rates and tax bases for indirect and direct taxes. Finally, to validate the model we perform an equalising Value-Added-Tax rates reform. We find that a budget-neutral uniform tax rate reform would be GDP and welfare improving. However, results across agents and sectors vary.
JRC Directorate:Growth and Innovation

Files in This Item:
There are no files associated with this item.

Items in repository are protected by copyright, with all rights reserved, unless otherwise indicated.