IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/66300.html
   My bibliography  Save this paper

Development of Web-Based CGE Model for Tax Policy Analysis

Author

Listed:
  • Amir, Hidayat
  • Nugroho, Anda

Abstract

The computable general equilibrium (CGE) model has played an important role on policy impact analysis. The main strength of CGE analysis is that it models the whole economy explicitly, capture the market mechanism, interlinking between sectors and transactions between economic agents despite being under restrictive assumptions. A clear microeconomic structure with links between micro and macro aspects of the economy makes it the soundest tool for quantitative policy analysis. The simulation results help analysts to understand the essential relationships relevant to particular policy and very useful to build a bridge between economists, policy makers and also stakeholders, and provide them with a base for dialogue. Fiscal Policy Agency (Badan Kebijakan Fiskal/BKF) is a unit in the Indonesia Ministry of Finance that responsible in the fiscal policy formulation. The unit intensively uses the CGE model as a tool of analysis particularly in the ex-ante impact of tax policy analysis. There are typical tax policies such as increasing (reducing) the VAT rate, excise tax, or import tariff, imposing export tax, adjusting the corporate and personal income tax rate that need to be evaluated and present the impacts into the policy formulation process. The simulation results need to be delivered concisely and in the very informative ways so that the costs and the benefits of the proposed policy clear enough to be understood; unuseful and irrelevant information are eliminated. This study attempts to develop a web-based CGE model for these purposes. Basically using cloud computing approach, the simulation processes are hidden and running in the server; in the web interface are only provided the options for policy simulation and then the presentation of the impacts (in graph and excel) after concluding the simulations.

Suggested Citation

  • Amir, Hidayat & Nugroho, Anda, 2013. "Development of Web-Based CGE Model for Tax Policy Analysis," MPRA Paper 66300, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66300
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/66300/7/MPRA_paper_66300.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stokey, Nancy L & Rebelo, Sergio, 1995. "Growth Effects of Flat-Rate Taxes," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 519-550, June.
    2. Easterly, William & Rebelo, Sergio, 1993. "Marginal income tax rates and economic growth in developing countries," European Economic Review, Elsevier, vol. 37(2-3), pages 409-417, April.
    3. Amir, Hidayat & Asafu-Adjaye, John & Ducpham, Tien, 2013. "The impact of the Indonesian income tax reform: A CGE analysis," Economic Modelling, Elsevier, vol. 31(C), pages 492-501.
    4. Ikhsan, Mohamad & Trialdi, Ledi & Syahrial, Syarif, 2005. "Indonesia's new tax reform: Potential and direction," Journal of Asian Economics, Elsevier, vol. 16(6), pages 1029-1046, December.
    5. Norman Gemmell, 1988. "Tax systems, tax revenue and growth in LDCs: A review of empirical evidence," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 23(2), pages 84-90, March.
    6. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521766968, December.
    7. Auerbach, Alan J., 1996. "Measuring the Impact of Tax Reform," National Tax Journal, National Tax Association, vol. 49(4), pages 665-73, December.
    8. Sandmo, Agnar, 1976. "Optimal taxation : An introduction to the literature," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 37-54.
    9. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    10. Auerbach, Alan J., 1996. "Measuring the Impact of Tax Reform," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(4), pages 665-673, December.
    11. Mr. John D Brondolo & Frank Bosch & Mr. Eric Le Borgne & Mr. Carlos Silvani, 2008. "Tax Administration Reform and Fiscal Adjustment: The Case of Indonesia (2001-07)," IMF Working Papers 2008/129, International Monetary Fund.
    12. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521139779, December.
    13. Lee, Young & Gordon, Roger H., 2005. "Tax structure and economic growth," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1027-1043, June.
    14. Samuelson, P. A., 1986. "Theory of optimal taxation," Journal of Public Economics, Elsevier, vol. 30(2), pages 137-143, July.
    15. Feldstein, Martin, 1973. "On the optimal progressivity of the income tax," Journal of Public Economics, Elsevier, vol. 2(4), pages 357-376.
    16. Arief Anshory Yusuf & Djoni Hartono & Wawan Hermawan & Yayan, 2008. "AGEFIS:Applied General Equilibrium for FIScal Policy Analysis," Working Papers in Economics and Development Studies (WoPEDS) 200807, Department of Economics, Padjadjaran University, revised Oct 2008.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amir, Hidayat & Asafu-Adjaye, John & Ducpham, Tien, 2013. "The impact of the Indonesian income tax reform: A CGE analysis," Economic Modelling, Elsevier, vol. 31(C), pages 492-501.
    2. Lemelin, André & Savard, Luc, 2022. "What do CGE models have to say about fiscal reform?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 758-774.
    3. Alfò, Marco & Carbonari, Lorenzo & Trovato, Giovanni, 2023. "On the effects of taxation on growth: an empirical assessment," Macroeconomic Dynamics, Cambridge University Press, vol. 27(5), pages 1289-1318, July.
    4. Muhammad Nadeem Sarwar, 2023. "An Evaluation of Different Tax Reform Proposals in Pakistan using CGE Model," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(3), pages 309-330.
    5. Kindsgrab, Paul M., 2022. "Do higher income taxes on top earners trickle down? A local labor markets approach," Journal of Public Economics, Elsevier, vol. 214(C).
    6. Herbert W. V. Hasudungan & Sulthon S. Sabaruddin, 2016. "The Impact of Fiscal Reform on Indonesian Macroeconomy: A CGE Framework," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 8(3), pages 181-202, September.
    7. Peter, Klara Sabirianova & Buttrick, Steve & Duncan, Denvil, 2010. "Global Reform of Personal Income Taxation, 1981–2005: Evidence From 189 Countries," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(3), pages 447-478, September.
    8. Dillip Kumar MUDULI & Nityasundar MANIK, 2020. "Tax structure and economic growth in general category states in India: A panel auto regressive distributed lag approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(623), S), pages 225-240, Summer.
    9. Chaitali Sinha, 2014. "Human Capital and Public Policy," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 79-125, June.
    10. Teresa Famulska & Jan Kaczmarzyk & Malgorzata Grzaba, 2021. "The Relationship between the Structure of Tax Revenues and the Structure of Public Expenditure in the Member States of the European Union," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 165-185.
    11. Denvil Duncan & Klara Sabirianova Peter, 2016. "Unequal inequalities: Do progressive taxes reduce income inequality?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 762-783, August.
    12. Iswahyudi, Heru, 2020. "The problem of gross receipts taxes in Indonesia: Economic distortions and policy options," MPRA Paper 100617, University Library of Munich, Germany.
    13. Amir, Hidayat & Hewings, Geoffrey J.D., 2013. "Distributional Welfare Impact of the 2013 Adjustment of Tax-Free Income Threshold in Indonesia: A CGE Simulation," MPRA Paper 68571, University Library of Munich, Germany.
    14. M. Alejandro Cardenete & M. Carmen Lima & Ferran Sancho, 2013. "Are There Key Sectors? An Appraisal Using Applied General Equilibrium," The Review of Regional Studies, Southern Regional Science Association, vol. 43(2,3), pages 111-129, Winter.
    15. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.
    16. Hummel, Albert Jan & Ziesemer, Vinzenz, 2023. "Food subsidies in general equilibrium," Journal of Public Economics, Elsevier, vol. 222(C).
    17. Wang, X. & Dietrich, J.P. & Lotze-Campen, H. & Biewald, A. & Munson, T.S. & Muller, C., 2018. "Trading More Food in the Context of High-end Climate Change: Implications for Land Displacement through Agricultural Trade," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276997, International Association of Agricultural Economists.
    18. Robert Dur & Coen Teulings, 2003. "Are Education Subsides an Efficient Redistributive Device?," CEE Discussion Papers 0030, Centre for the Economics of Education, LSE.
    19. Gian Maria Milesi-Ferretti & Nouriel Roubini, 1995. "Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis," Working Papers 95-18, New York University, Leonard N. Stern School of Business, Department of Economics.
    20. Günther Rehme, 2011. "Endogenous Policy And Cross‐Country Growth Empirics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 262-296, May.

    More about this item

    Keywords

    computable general equilibrium; web-based interface; tax policy; impact analysis;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:66300. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.