Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102586
Authors: 
Janský, Petr
Year of Publication: 
2014
Series/Report no.: 
IES Working Paper 07/2014
Abstract: 
The rates of value added tax (VAT) have recently changed in the Czech Republic, and I simulate the impact of these reforms. They are an example of changes in indirect taxes that change the prices of goods and services, to which households can respond by adjusting their expenditures. I first estimate the behavioural response of consumers to price changes in the Czech Republic by applying a consumer demand model of the quadratic almost ideal system (QUAIDS) on the basis of the Czech Statistical Office household expenditure and price data for the period from 2001 to 2011. I derive estimates of own- and cross-price and income elasticities for individual households. I then use these elasticities to estimate the impact of the changes in VAT rates that were proposed or implemented between 2011 and 2013, on households' quantity demanded and government revenues. One of the main findings is that the estimated increases in government revenues that take the consumer responses into account are more than a quarter lower than the estimates that use the static simulation.
Subjects: 
consumer behaviour
demand system
QUAIDS
tax reforms
value added tax
JEL: 
D12
H20
H31
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
739.64 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.