Rebalancing and the Chinese VAT: Some Numerical Simulation Results

Li, Chunding; Whalley, John

doi:10.3386/w16686

Cited by 3 publications

(1 citation statement)

References 11 publications

(14 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We then use a particular functional form that allows some countries to be savers and others borrowers, and in the Armington trade structure this allows for endogenous determination of trade imbalances. This structure differs from an alternation endogenous trade imbalance simulation for China recently used by Li and Whalley (2011), which does not fit for the US and Germany. We calibrate this model to 2010 data on consumption, production, and trade, involving goods in each country and use immobile capital and labor as factor inputs.…”

Section: Introductionmentioning

confidence: 93%

Indirect Tax Initiatives and Global Rebalancing

Whalley

2016

CESifo Economic Studies

Self Cite

View full text Add to dashboard Cite

This paper discusses how joint cross country indirect tax initiatives can be used to achieve global rebalancing. This is potentially an important development for G20 discussions which thus far have centered on exchange rates as the instruments to achieve rebalancing. We suggest that if China and Germany (as major surplus countries) switch their present VAT systems from a destination principle to an origin principle, and the US (as the major deficit country) adopts a VAT on a destination principle VAT, jointly these actions can significantly reduce the three countries' joint imbalances and so contribute to global rebalancing. We use a numerical general equilibrium model with a monetary structure incorporating inside money to capture endogeneity of trade imbalances, and to also investigate the potential impacts of such initiatives. These confirm that VAT structures are not only good for global rebalancing but also the changes we consider are beneficial for welfare and revenue collection. Our research is aimed to inject new ideas to the present global rebalancing debate.

show abstract

Section: Introductionmentioning

confidence: 93%

Indirect Tax Initiatives and Global Rebalancing

Whalley

2016

CESifo Economic Studies

Self Cite

View full text Add to dashboard Cite

show abstract

Numerical General Equilibrium Analysis of China's Impacts from Possible Mega Trade Deals

Li¹,

Wang²,

Whalley³

2014

Self Cite

View full text Add to dashboard Cite

This paper explores the potential impacts on both China and other major countries of possible mega trade deals. These include the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP), and various blocked deals. We use a numerical 13-country global general equilibrium model with trade costs to investigate both tariff and non-tariff effects, and include inside money to endogenously determine imports on the trade imbalance. Trade costs are calculated using a method based on gravity equations. Simulation results reveal that all FTA participation countries will gain but all FTA non-participation countries will lose. If non-tariff barriers are reduced more, the impacts will be larger. All effects to China on welfare, trade, export and import are positive. Comparatively China-TPP and RCEP will yield the highest welfare outcomes for the US in our model, China-Japan-Korea FTA will generate the second highest welfare outcome, and China-US FTA will generate the third highest welfare outcome. For the US, China-TPP FTA will generate the highest welfare outcome.

show abstract

External Sector Rebalancing and Endogenous Trade Imbalance Models

Whalley

2012

Contemporary Economics

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Issue 4 20-26 2012 I discuss the need for trade models to incorporate endogenous trade imbalances both to more adequately capture the reality of a global economy with large imbalances and pressures from the financial crisis for countries to reduce imbalances. Conventional general equilibrium trade models implicitly incorporate monetary neutrality and either have zero trade balance as a property of equilibrium, or have a fixed and exogenous trade imbalance. Models which are discussed here have a variety of forms. In one, central banks fix exchange rates and operate a non accommodative monetary policy and accumulate reserves. Changes in both trade and monetary policies change reserve accumulative and with the external sector imbalances. This is a reflection of China's current policy regime. In another intertemporal preferences allow for simultaneous inter commodity and intertemporal trade across countries, and with changed intertemporal trade changed external sector imbalances within the period. These formulations are each applied to potential tax initiatives to aid in rebalancing. Terms of use: Documents in IntroductionRebalancing refers to the reduction of large aggregate imbalances, covering trade (and current account) imbalances, public sector deficits, and high savings rates in some countries and low savings rates in others. Here Endogenous Trade Imbalance ModelsConventional real side trade models (see Dixit & Norman (1980)) sit as a subclass of general equilibrium models of pure barter form, which if taken to a simple monetized extension via a simple quantity theory of money approach exhibit neutrality of money. In these, in 2 country form, once domestic money supplies are determined exchange rates are endogenously determined in such a way that changes in monetary policy only affect exchange rates with no real effects. In such models, in addition, trade balance by country is either zero as a property of equilibrium; or meets an exogenously given inter country transfer, which is fixed and given and implies an exogenous trade imbalance. External Sector

show abstract

Rebalancing and the Chinese VAT: Some Numerical Simulation Results

Cited by 3 publications

References 11 publications

Indirect Tax Initiatives and Global Rebalancing

Indirect Tax Initiatives and Global Rebalancing

Numerical General Equilibrium Analysis of China's Impacts from Possible Mega Trade Deals

External Sector Rebalancing and Endogenous Trade Imbalance Models

Contact Info

Product

Resources

About