Inverted Haavelmo Effects in a General Equilibrium Analysis of the Impact of Implementing the Scottish Variable Rate of Income Tax
Lecca, Patrizio and McGregor, Peter G. and Swales, Kim and Yin, Ya Ping (2010) Inverted Haavelmo Effects in a General Equilibrium Analysis of the Impact of Implementing the Scottish Variable Rate of Income Tax. Discussion paper. University of Strathclyde, Glasgow.
Preview |
Text.
Filename: Lecca_etal_2010_Inverted_haavelmo_effects_in_a_general_equilibrium_analysis.pdf
Final Published Version Download (662kB)| Preview |
Abstract
The Scottish Parliament has the authority to make a balanced-budget expansion or contraction in public expenditure, funded by corresponding local changes in the basic rate of income tax of up to 3p in the pound. This fiscal adjustment is known as the Scottish Variable Rate of income tax, though it has never, as yet, been used. In this paper we attempt to identify the impact on aggregate economic activity in Scotland of implementing these devolved fiscal powers. This is achieved through theoretical analysis and simulation using a Computable General Equilibrium (CGE) model for Scotland. This analysis generalises the conventional Keynesian model so that negative balanced-budget multipliers values are possible, reflecting a regional “inverted Haavelmo effect”. Key parameters determining the aggregate economic impact are the extent to which the Scottish Government create local amenities valuable to the Scottish population and the extent to which this is incorporated into local wage bargaining.
ORCID iDs
Lecca, Patrizio, McGregor, Peter G. ORCID: https://orcid.org/0000-0003-1221-7963, Swales, Kim and Yin, Ya Ping;-
-
Item type: Monograph(Discussion paper) ID code: 67829 Dates: DateEvent2010PublishedNotes: Published as a paper within the Discussion Papers in Economics, No. 10-13 (2010) Subjects: Social Sciences > Communities. Classes. Races > Regional planning
Social Sciences > Economic TheoryDepartment: Strathclyde Business School > Economics Depositing user: Pure Administrator Date deposited: 14 May 2019 13:43 Last modified: 27 Sep 2024 01:30 URI: https://strathprints.strath.ac.uk/id/eprint/67829