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: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.cnrs.fr
François Gardes: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.cnrs.fr
Silvia Salazar: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.cnrs.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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 (search for similar items in EconPapers)
JEL-codes: D04 D11 D12 D13 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2013-07
New Economics Papers: this item is included in nep-acc and nep-cmp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:13061

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