International Effects of Tax Reforms

International Monetary Fund

No 1988/062, IMF Working Papers from International Monetary Fund

Abstract: This paper highlights the significance of open-economy considerations in the analysis of tax reforms. It focuses on domestic and international consequences of revenue-neutral conversion between income and value-added tax systems. The principal result is that the direction of changes in key macroeconomic variables consequent on such tax conversions depends critically on the current account position. For example, a conversion from an income to a value-added tax system lowers the world interest rate if the country adopting the reform runs a surplus in the current account of its balance of payments, and vice versa.

Keywords: WP; rate of interest; supply schedule; tax system; tax reform; consumption tax; world rate of interest; tax structure; tax arrangement; discount factor; Income tax systems; Consumption taxes; Income and capital gains taxes; Consumption; Trade balance; Global (search for similar items in EconPapers)
Pages: 37
Date: 1988-01-01
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