scarfmge.gms : Tax distortions in a small activity analysis model
Tax Distortions in a Small Activity Analysis Model
Reference:
- Scarf, H, and Hansen, T, The Computation of Economic Equilibria. Yale University Press, 1973.
Small Model of Types: MPSGE mcp
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$TITLE Tax Distortions in a Small Activity Analysis Model (SCARFMGE,SEQ=152)
$Ontext
Tax Distortions in a Small Activity Analysis Model
Scarf, H, and Hansen, T, The Computation of Economic Equilibria.
Yale University Press, 1973.
HERE WE CONSIDER THE EFFECTS OF TAXATION:
$Offtext
SET SC TAX RATE SCENARIOS /ZERO, LOW, MEDIUM, HIGH/;
PARAMETER T(SC) TAX RATES / LOW 0.05, MEDIUM 0.20, HIGH 0.50/;
SETS
C COMMODITIES
/UNSKLAB, SKILLAB, CAPEOP, NONDURBL, DURABLE, CAPBOP/
K(C) CAPITAL INPUT IDENTIFIER /CAPBOP/,
H CONSUMERS /AGENT1,AGENT2,AGENT3,AGENT4,AGENT5/
S SECTORS /D1, D2, N1, N2, N3, CD, C1, C2/;
ALIAS (C,CC);
TABLE E(C,H) Commodity endowments
AGENT1 AGENT2 AGENT3 AGENT4 AGENT5
CAPBOP 3 0.1 2 1 6
SKILLAB 5 0.1 6 0.1 0.1
UNSKLAB 0.1 7 0.1 8 0.5
DURABLE 1 2 1.5 1 2
PARAMETER TR(H) TAX DISTRIBUTION RULE /AGENT1 1/;
SCALAR TK TAX ON CAPITAL IN CURRENT SCENARIO;
TABLE D(C,H) Reference demands
AGENT1 AGENT2 AGENT3 AGENT4 AGENT5
CAPEOP 4 0.4 2 5 3
SKILLAB 0.2 0.5
UNSKLAB 0.6 0.2 0.2
NONDURBL 2 4 2 5 4
DURABLE 3.2 1 1.5 4.5 2
PARAMETER ESUB(H) Elasticities in demand
/ AGENT1 1.2,
AGENT2 1.6,
AGENT3 0.8,
AGENT4 0.5,
AGENT5 0.6 /;
TABLE DATA(*,C,S) Activity analysis matrix
D1 D2 N1 N2 N3
OUTPUT.NONDURBL 6.0 8.0 7.0
OUTPUT.DURABLE 4.0 3.5
OUTPUT.CAPEOP 4.0 4.0 1.6 1.6 1.6
INPUT .CAPBOP 5.3 5.0 2.0 2.0 2.0
INPUT .SKILLAB 2.0 1.0 2.0 4.0 1.0
INPUT .UNSKLAB 1.0 6.0 3.0 1.0 8.0
+ CD C1 C2
OUTPUT.CAPEOP 0.9 7.0 8.0
INPUT .CAPBOP 1.0 4.0 5.0
INPUT .SKILLAB 3.0 2.0
INPUT .UNSKLAB 1.0 8.0;
$ONTEXT
$MODEL: SCARF
$SECTORS:
Y(S) ! Activity level
$COMMODITIES:
P(C) ! Market price
PT$TK ! Price index for lumpsum redistribution of tax revenue.
$CONSUMERS:
HH(H) ! Household income
GOVT$TK ! Government tax revenue (only included when taxes are levied).
$REPORT:
V:WELFARE(H) W:HH(H)
$PROD:Y(S)
O:P(C) Q:DATA("OUTPUT",C,S)
I:P(C) Q:DATA("INPUT" ,C,S) A:GOVT$TK T:TK$K(C)
$DEMAND:HH(H) s:ESUB(H)
D:P(C) Q:D(C,H)
E:P(C) Q:E(C,H)
E:PT$TK Q:TR(H)
$DEMAND:GOVT$TK
D:PT
$OFFTEXT
* READ THE HEADER:
$SYSINCLUDE mpsgeset SCARF
* REPORT TABLE:
PARAMETER EV(H,SC) HICKS-EQUIVALENT VARIATION (%);
P.FX("UNSKLAB") = 1;
LOOP(SC,
* SET THE CAPITAL TAX RATE:
TK = T(SC);
* GENERATE AND SOLVE THE MODEL:
$INCLUDE SCARF.GEN
PT.L = 1;
SOLVE SCARF USING MCP;
EV(H,SC) = WELFARE.L(H);
);
* AFTER COMPLETION, CONVERT TO TRUE EQUIVALENT VARIATIONS:
EV(H,SC) = 100 * (EV(H,SC)/EV(H,"ZERO") - 1);
DISPLAY EV;
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