General Equilibrium Effects Fo Taxation on Investment in a Developing Country: The Case of Pakistan
Public Finance, Vol. 48, No. 3, 1993
Posted: 28 Feb 2006
In this paper we specify a dynamic general equilibrium framework to evaluate the cost effectiveness of incentives for industrial and technological development offered through the tax code in Pakistan. The model enables us to estimate adjustment effects on factor use and output arising from a tax incentive policy change. Detailed calculations are presented showing change in output, use of capital by sector, changes in tax revenue paid by each sector and impacts on macroeconomic aggregates. Welfare gains and losses of urban and rural consumers associated with proposed policy changes are also estimated.
Keywords: Taxation, Investment, Pakistan
JEL Classification: D58, H24
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