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Integrating indirect taxation into EUROMOD. Documentation and results for Germany

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  • Decoster, André
  • Ochmann, Richard
  • Spiritus, Kevin

Abstract

This paper documents the integration of microsimulation tools for direct taxation, indirect taxation, and social benefits in the context of the European tax and benefit simulator, EUROMOD. Integration has been developed parallely for the two countries, Belgium and Germany. The paper at hand documents the process and presents simulation results for the case of Germany. An integrated data base underlying EUROMOD that contains household-level information on income and consumption is generated. Consumption micro data from the 2008 cross section of the household budget survey for Germany is used to impute information on spending for durable and non-durable commodities into EU-SILC data, applying regression-based imputation techniques. Engel curves are estimated at the household level for total non-durable spending, expenditures on durable goods, as well as non-durable expenditure share equations. Distributional plots evaluate the goodness of fit of the imputations. As a result, status quo tax legislation is simulated in EUROMOD on imputed household spending, and incidence analysis of baseline VAT is undertaken. Finally, several arbitrary policy reforms implementing VAT rate uniformity are analysed with respect to their distributional impact.

Suggested Citation

  • Decoster, André & Ochmann, Richard & Spiritus, Kevin, 2013. "Integrating indirect taxation into EUROMOD. Documentation and results for Germany," EUROMOD Working Papers EM20/13, EUROMOD at the Institute for Social and Economic Research.
    • Handle: RePEc:ese:emodwp:em20-13
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    References listed on IDEAS

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    1. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 4-26.
    2. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    3. Richard Ochmann & Patricia Gallego Granados, 2013. "EUROMOD Country Report Germany: EUROMOD Version F7.0; Project on Behalf of the Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission," Data Documentation 67, DIW Berlin, German Institute for Economic Research.
    4. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    5. Richard Ochmann & Frank Fossen, 2012. "EUROMOD Country Report Germany: EUROMOD Version F6.0; Project on Behalf of the Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission," Data Documentation 64, DIW Berlin, German Institute for Economic Research.
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    Cited by:

    1. Maximilian Joseph Blömer & Przemyslaw Brandt & Mosler Martin & Andreas Peichl, 2021. "Distributional Effects of the Child Bonus and the Temporary Reduction in VAT in 2020," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(02), pages 45-50, February.
    2. Nico Pestel & Eric Sommer, 2017. "Shifting Taxes from Labor to Consumption: More Employment and more Inequality?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(3), pages 542-563, September.
    3. Loeffler, Max & Peichl, Andreas & Pestel, Nico & Siegloch, Sebastian & Sommer, Eric, 2014. "Documentation IZA?MOD v3.0: The IZA Policy Simulation Model," IZA Discussion Papers 8553, Institute of Labor Economics (IZA).
    4. Vandyck, Toon & Van Regemorter, Denise, 2014. "Distributional and regional economic impact of energy taxes in Belgium," Energy Policy, Elsevier, vol. 72(C), pages 190-203.
    5. Gemma Wright & Michael Noble & Helen Barnes & David McLennan & Michell Mpike, 2016. "SAMOD, a South African tax-benefit microsimulation model: Recent developments," WIDER Working Paper Series wp-2016-115, World Institute for Development Economic Research (UNU-WIDER).
    6. Buhlmann, Florian & Hebsaker, Michael & Kreuz, Tobias & Schmidhäuser, Jakob & Siegloch, Sebastian & Stichnoth, Holger, 2022. "ZEW-EviSTA: A microsimulation model of the German tax and transfer system," ZEW Discussion Papers 22-026, ZEW - Leibniz Centre for European Economic Research.
    7. Maximilian Joseph Blömer & Andreas Peichl, 2020. "The ifo Tax and Transfer Behavioral Microsimulation Model," ifo Working Paper Series 335, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Michael Savage, 2017. "Integrated Modelling of the Impact of Direct and Indirect Taxes Using Complementary Datasets," The Economic and Social Review, Economic and Social Studies, vol. 48(2), pages 171-205.

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