Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190465
Authors: 
Cseres-Gergely, Zsombor
Molnár, György
Szabó, Tibor
Year of Publication: 
2017
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2017/4
Abstract: 
VAT rates have changed multiple times and to a relatively great extent in Hungary during the past years. We use the resulting price changes in estimating the price- and income-elasticity of households' expenditures. As a novelty, we introduce an interaction term in estimating the demand system and show that the own price elasticity of food is increasing with increasing production for own consumption. Based on the estimation results, we compute the average welfare effect of the changes and describe also its heterogeneity within the population. We find that the VAT-reforms in 2006 and 2009 have both decreased the welfare of those in the first income quintile. We also look at the welfare effect of multiple hypothetic reforms such as the decrease of the VAT rate of food and a decrease of utility prices as well as a subsidy to production for own consumption. We find that the best targeted measure is an income-transfer to the low-income unemployed either directly or through participation in the public works scheme.
Subjects: 
QUAIDS model
household expenditures
consumer behaviour
compensating variation
simulation
welfare effect
production for own consumption
JEL: 
D12
H20
H31
ISBN: 
978-615-5594-83-0
Document Type: 
Working Paper
Social Media Mentions:

Files in This Item:
File
Size





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