Showing 3 results for Computable General Equilibrium Model
Allah Mohamad Aghaee, Majid Maddah,
Volume 28, Issue 47 (11-2020)
Abstract
Taxes are the most stable government revenues and they can be used as tools to implement social justice and to encourage investment. The purpose of this article is to determine the optimal vat rate by using a neoclassical growth model in Iran. To this end a generalized segmented growth model including household, firm and government was first developed. Using the parameters of the Iranian economy and social accounts matrix (Sam 1395), the mentioned model is calibrated and the optimal tax rate is determined in two scenarios in such a way that it receives the most income and has the least disruption. The research method is analytical and using a macroeconomic model. The research model is in the framework of computable general equilibrium model (CGE) and tax achievement in different scenarios. The results show that the implementation of vat at different Rates and in two scenarios 5 and 10 percent will increase the general level of prices, reduce GDP, increase government revenue, reduce household income and expenditure, increased total absorption and exchange rate.
Gayaneh Nazer, Ali Taiebnia, Kowsar Yousefi,
Volume 30, Issue 53 (5-2022)
Abstract
This study investigates welfare impacts of income and consumption tax bases, using a CGE model of Iran's economy in 2011. The results indicate that, under a fixed government revenue, a switch from income to consumption taxation increases total welfare; however, the welfare rise is heterogeneous between income deciles. The mentioned reform causes the welfare index of low-income deciles to decrease more than the others. As income levels increase, the negative welfare effect decreases, although in the last decile (both rural and urban) the decreasing pattern turns into an increasing one, due to tax evasion in higher deciles of income. Overall, results show that the negative effects of mentioned reform are greater on low-income deciles and therefore it is necessary to simultaneously extend social security for low-income households.
Gayaneh Nazer, Ali Taiebnia, Kowsar Yousefi,
Volume 30, Issue 55 (12-2022)
Abstract
One of the most important considerations for designing a proper tax system is to not disturb economic system as much as possible. This study compares the economic effects of consumption and corporate income taxations, using a Computable General Equilibrium (CGE) model. The model is calibrated using the Social Accounting Matrix and the Input-Output table of Iran’s economy in 2011. First, we assess a scenario in which consumption tax has been raised gradually up to 100% of its base amount, along with a proportional decrease in corporate income tax. Overall, the government tax revenue is held fixed. Here, the intermediary goods become expensive, causing the production to decline. Moreover, we observe a rise in savings and investment, however, this has no effect on production since savings are not entering the production process in short run. The second scenario is a dynamic one, in which an increase in consumption tax is compensating a decrease in corporate income tax, holding government budget fixed. As in the static model results, we observe a rise in intermediary goods prices, a reduction in the production of the first period, but also an increase in future production which is construed as the result of an increase in savings and investment streaming into the production process in long run.
