Specific Inputs, Value-Added, and Production Linkages in Tax-Incidence Theory

Kul Bhatia ()

No 9714, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: A general equilibrium framework is developed for analyzing the role of immobile factors of production which produce inputs for other sectors. The production process and the cross-sector connections are explicitly specified, and tax-incidence propositions are compared with those in related models. Numerical examples, based on a consistent data set for the U.S. economy, illustrate the results and highlight the difficulties that arise in defining equivalent specifications, analytically and empirically. Goods mobility offsets some effects of factor immobility, but the computed tax elasticities are rarely the same as in mobile-factors-only models. The Marshallian short-run-long-run distinction, blurred somewhat by production linkages, does not disappear.

Keywords: PRODUCTION; ECONOMIC EQUILIBRIUM; TAX POLICY (search for similar items in EconPapers)
JEL-codes: H20 H22 (search for similar items in EconPapers)
Date: 1997
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Journal Article: Specific Inputs, Value-Added, and Production Linkages in Tax-Incidence Theory (2001)
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