Measuring the Tax Revenue Elasticity to Output in Dynamic Stochastic General Equilibrium Model

Kazuki Hiraga
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Kazuki Hiraga: Faculty of Economics, Keio University

No 2012-010, Keio/Kyoto Joint Global COE Discussion Paper Series from Keio/Kyoto Joint Global COE Program

Abstract: We use structural method, that is, Dynamic Stochastic General Equilibrium (DSGE) model with fiscal stabilization rules, for calculating the tax revenue elasticity rate and estimate more plausible value of it. In the short-run, the tax revenue elasticity to output takes negative value and, in medium-run, it takes quite large positive values (from 2.3 to 4) in both permanent and temporary positive productivity shocks. On the other hand, in the long-run, under permanent positive productivity shock remains nearly the value of the tax revenue elasticity converses to about 2.3. But, under temporary one, it decreases and reverses it.

Pages: 21 pages
Date: 2012-07
New Economics Papers: this item is included in nep-dge, nep-pbe and nep-pub
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