A Microsimulation on Tax Reforms in LAC Countries: A New Approach Based on Full Expenditures

Carla Canelas (), François Gardes () and Silvia Salazar ()
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Carla Canelas: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
François Gardes: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Silvia Salazar: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: In this article, we propose a new method to estimate price effects on micro cross-sectional data using full prices that take into account household domestic production. We use behavioral microsimulations by subpopulations to analyze the redistributive impact of changes on Value Added Tax (VAT) rates in Ecuador and Guatemala. Utility analysis is used to evaluate the consequences on households welfare caused by these tax reforms. The proposed model solves the crucial problem of price data availability in developing countries. The estimates of the full price elasticities highlight the importance of the substitution between time and monetary expenditures within the households domestic production function and show that traditional approaches only tell half of the story. In general, the utility estimates seem to be consistent as they have the expected sign and follow the same pattern of changes in consumption.

Keywords: Consumer demand; full prices; microsimulation; taxes; time-use; welfare; Demande du consommateur; bien-être; micro-simulation; impôts; emploi du temps; prix complet (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-acc, nep-cmp, nep-pbe and nep-upt
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00881014v1
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Citations: View citations in EconPapers (4)

Published in 2013

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00881014

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