Tax Efficiency in an Open Economy

Thierry Pujol and W. Perraudin

No 1990/094, IMF Working Papers from International Monetary Fund

Abstract: This note assesses the relative efficiency of different tax bases in an open economy. If terms of trade effects are large, lump-sum taxation may be inferior to distortionary consumption or wage taxes. This result is demonstrated analytically using a simple neoclassical model. An overlapping generations, general equilibrium, simulation model is then employed to show the empirical significance of the effects involved.

Keywords: WP; lump sum (search for similar items in EconPapers)
Pages: 14
Date: 1990-10-01
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