UCL logo

UCL Discovery

UCL home » Library Services » Electronic resources » UCL Discovery

Tax reform and welfare measurement: do we need demand system estimation?

Banks, J.; Blundell, R.; Lewbel, A.; (1996) Tax reform and welfare measurement: do we need demand system estimation? The Economic Journal , 106 (438) pp. 1227-1241.

Full text not available from this repository.

Abstract

The exact measurement of the welfare costs of tax and price reform requires a detailed knowledge of individual preferences. Typically, first-order approximations of welfare costs are calculated avoiding detailed knowledge of substitution effects. The authors derive second-order approximations which, unlike first-order approximations, require knowledge of the distribution of substitution elasticities. This paper asks to what extent simple approximations can be used to measure the welfare costs of tax reform and evaluates the magnitude of the biases for a plausible size tax reform. In the authors' empirical examples, first-order approximations display systematic biases; second-order approximations always work well.

Type: Article
Title: Tax reform and welfare measurement: do we need demand system estimation?
Publisher version: http://www3.interscience.wiley.com/journal/1179846...
Language: English
Additional information: Please see http://eprints.ucl.ac.uk/14782/ for a working paper version
Keywords: JEL classification: H20, D11. Elasticities, individual, preference, tax
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/14167
Downloads since deposit
0Downloads
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item