Who Has to Pay More, Health Service Sectors, the Pharmaceutical Industry, or Future Generations? A Computable General Equilibrium Approach

Ryuta Kato

No EMS_2011_11, Working Papers from Research Institute, International University of Japan

Abstract: This paper presents a computable general equilibrium (CGE) framework to numerically examine the effect of tax/subsidy reforms of health related sectors. The generalized framework with the latest Japanese input-output table of year 2005 with 108 different production sectors provides the following results: A 50 percent tax cut of the pharmaceutical industry, or a 50 percent subsidy increase for the hospitals sector induces a welfare gain of 95.6 billion or 72.3 billion Japanese yen, respectively, when the government budget is not balanced. However, such an unbalanced budget policy also generates new de cits of 9.26 billion and 5.58 billion Japanese yen, respectively. Even if the government budget is balanced, welfare enhancing reforms are still possible but only with sacri ces of the pharmaceutical industry. If the pharmaceutical industry is also compensated with the balanced budget, then welfare enhancing reforms only within health related sectors seem implausible. While the best reform with a compensation policy results in a welfare gain of 61 billion Japanese yen, such a reform still generates de cits of 4.4 billion Japanese yen. If the government tries to minimize de cits with a compensation policy, then de cits can be reduced to 0.62 billion Japanese yen, but a welfare gain completely vanishes.

Keywords: Computable General Equilibrium (CGE) Mod el; Tax Reform; Health; Pharmaceutical Industry; Taxation; Subsidy; Simulation (search for similar items in EconPapers)
JEL-codes: C68 H51 H53 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011-05
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2011_11.pdf First version, 2011 (application/pdf)

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:iuj:wpaper:ems_2011_11

Access Statistics for this paper

More papers in Working Papers from Research Institute, International University of Japan 777 Kokusai-cho, Minami Uonuma0-shi, Niigata 949-7277 JAPAN. Contact information at EDIRC.
Bibliographic data for series maintained by Kazumi Imai, Office of Academic Affairs (ori@iuj.ac.jp).