Marginal and Non-Marginal Commodity Tax Reforms with Rank Two and Rank Three Demographic Demand Systems
University of Tasmania WP 1997-02
This paper provides evidence showing that the insensitivity of marginal commodity tax reforms to demand specification, observed in recent studies, does not extend to the non-marginal case. The size of the tax change has a sharp impact on commodity tax reforms. In contrast to price effects, neither household composition nor quadratic Engel curves alters significantly the direction of tax change.
JEL Classification: B23, D12, H21
Date posted: February 24, 1998
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