EconPapers    
Economics at your fingertips  
 

Indirect tax reform and the specification of demand: the case of Ireland

Michael Savage ()

International Tax and Public Finance, 2016, vol. 23, issue 2, 368-399

Abstract: This paper examines the sensitivity of marginal tax reform analysis to changes in the underlying demand system. In particular, we analyse the sensitivity of results from Ahmad and Stern’s (J Publ Econ 25(3):259–298, 1984 ) marginal tax reform model to different specifications of Deaton and Muellbauer’s (Am Econ Rev 70(3):312–326, 1980 ) Almost Ideal Demand System (AIDS) and Banks et al.’s (Rev Econ Stat 79(4):527–539, 1997 ) Quadratic AIDS. Using Irish Household Budget Survey data, we show that tax reform results exhibit a low degree of sensitivity to changes in the underlying demand system. An adjustment for a mass of observed zero-expenditures in the data for certain goods produces most sensitivity in the tax reform results. Even in these cases, many of the tax reform recommendations remain constant. Including demerit good arguments in the tax reform model can substantially alter the tax reform recommendations relating to demerit goods. Notably though, when we include these arguments in the tax reform model, the results are particularly insensitive to changes in the underlying demand system. Copyright Springer Science+Business Media New York 2016

Keywords: Indirect tax reform; AIDS; QUAIDS; Demographics; Zero-expenditures; Merit goods; H21; H23 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s10797-015-9362-3 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:23:y:2016:i:2:p:368-399

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2

DOI: 10.1007/s10797-015-9362-3

Access Statistics for this article

International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf

More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2021-05-22
Handle: RePEc:kap:itaxpf:v:23:y:2016:i:2:p:368-399