Abstract:Background: Despite the well-documented health benefits of nuts, consumption at the population level remains low. Understanding motivators of and deterrents to consuming nuts among the general public may inform the development of initiatives to improve levels of consumption [...]
“…Chiu (2001) estimates a value of1.2 for the intratemporal substitution between private consumption and government spending in Taiwan Bouakez and Rebei (2007). use three alternative values for the intratemporal elasticity of substitution between private and public spending: 1, 0.45, and 0.25, and estimate a value of 0.33 for the US, much lower than the estimated value byAmano and Wirjanto (1997) Brown and Wells (2008). estimate the elasticity of substitution for Australia in the range from 0.09 to 0.17.…”
The welfare cost of fiscal policy does not only depend on distortions by taxation, but also on how public revenues are spent in the economy, and on wealth inequality. Many of the government's spending activities are related to the provision of consumption goods and services, and the provision of public inputs. Hence, optimal taxation policy is not independent of how fiscal revenues are spent. This paper uses a model with two types of agents: Active households (who behave as Ricardian agents) and non-active governmentdependent households (who behave as hand-to-mouth agents). The model economy considers a detailed government for both fiscal revenues and public spending. We compute welfare changes of different tax rates and alternative spending policies and quantify the trade-off of fiscal policy across the two groups of agents. The main results can be presented as follows: i) Distortions from some taxes on economic activity can be positive due to the presence of public inputs. ii) Output efficiency can be gained by changing the tax mix while keeping constant fiscal revenues. iii) Total welfare gains can be obtained by increasing tax rates, except the capital income tax, at the cost of reducing the welfare of active households.
“…Chiu (2001) estimates a value of1.2 for the intratemporal substitution between private consumption and government spending in Taiwan Bouakez and Rebei (2007). use three alternative values for the intratemporal elasticity of substitution between private and public spending: 1, 0.45, and 0.25, and estimate a value of 0.33 for the US, much lower than the estimated value byAmano and Wirjanto (1997) Brown and Wells (2008). estimate the elasticity of substitution for Australia in the range from 0.09 to 0.17.…”
The welfare cost of fiscal policy does not only depend on distortions by taxation, but also on how public revenues are spent in the economy, and on wealth inequality. Many of the government's spending activities are related to the provision of consumption goods and services, and the provision of public inputs. Hence, optimal taxation policy is not independent of how fiscal revenues are spent. This paper uses a model with two types of agents: Active households (who behave as Ricardian agents) and non-active governmentdependent households (who behave as hand-to-mouth agents). The model economy considers a detailed government for both fiscal revenues and public spending. We compute welfare changes of different tax rates and alternative spending policies and quantify the trade-off of fiscal policy across the two groups of agents. The main results can be presented as follows: i) Distortions from some taxes on economic activity can be positive due to the presence of public inputs. ii) Output efficiency can be gained by changing the tax mix while keeping constant fiscal revenues. iii) Total welfare gains can be obtained by increasing tax rates, except the capital income tax, at the cost of reducing the welfare of active households.
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