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Eurasian Economic Review

, Volume 9, Issue 4, pp 459–466 | Cite as

Unit versus ad valorem tax comparisons in a simple New Keynesian dynamic stochastic general equilibrium model

  • Kazuki HiragaEmail author
Original Paper
  • 29 Downloads

Abstract

This paper compares unit and ad valorem taxes using a New Keynesian dynamic stochastic general equilibrium model. We show that the ad valorem tax increase is superior to the unit tax increase with respect to the comparative statics, while is equivalent to under the log-linear setting, even when price stickiness and monopolistic competition are present.

Keywords

Unit tax Ad valorem tax New Keynesian dynamic stochastic general equilibrium model 

JEL Classification

E62 H20 

Notes

Acknowledgements

I gratefully acknowledge Go Kotera, Tomohito Okabe and Hiroaki Hayakawa. Financial support from the Japanese Ministry of Education, Culture, Sports, Science and Technology (No. 16K17135) is grateful acknowledge.

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Copyright information

© Eurasia Business and Economics Society 2018

Authors and Affiliations

  1. 1.School of Political Science and EconomicsTokai UniversityTokyoJapan

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