SFB 303 Discussion Paper No. A - 276
Author: Keuschnigg, Christian
Title: The Transition to a Cash Flow Income Tax
Abstract: The paper presents a one good two country computable general
equilibrium model with overlapping generations to evaluate intertemporal and
international effects from tax reform. Model treatment of household and firm
behavior is firmly rooted in the microeconomic theory of intertemporal
choice. The paper considers the effects from the implementation of a cash
flow income tax which was shown to be neutral with respect to intertemporal
decisions. The paper compares the effects in closed and open economies. In
solving for transition paths to new intertemporal equilibria, I also discuss
the generational welfare consequences of various arrangements that affect
the transition paths.
Creation-Date: January 1990
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