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CGE (Computable General Equilibrium) modelling

Research regarding CGE modelling


Improving the Realism of Tax CGE Models

This project aimed to develop the existing computable general equilibrium (CGE) model used by HMRC/HMT. The intention was to include within the model a richer tax structure and to exploit the ability of CGE models to trace the impacts of policy changes across the economy. The project examined issues such as the effect that changes in income taxes may have on consumption tax revenues, the way that income and consumption taxes interact to affect labour supply decisions, and the way in which income taxes could be used to offset some of the undesirable distributional effects of consumption tax changes (such as broadening the base of VAT).

(See also Discussion Paper 020 - 18).