European Fiscal Harmonization and the French Economy

October 1, 1990

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W. R. M. Perraudin, and Thierry Pujol. European Fiscal Harmonization and the French Economy, (USA: International Monetary Fund, 1990) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the implications of European fiscal harmonization for the French economy using a general equilibrium model. The latter extends the overlapping generations simulation model of Auerbach and Kotlikoff in three ways. A well-developed external sector is included. Households face constraints in their borrowing. The population comprises “rich” and “poor” households with different labor productivities. The harmonization policy that involves cuts in VAT and savings taxes leads to welfare losses for both rich and poor approximately equivalent to one percent of GDP.

Subject: Consumption, Consumption taxes, Income and capital gains taxes, National accounts, Personal income tax, Taxes, Value-added tax

Keywords: Benefits household, Consumption, Consumption taxes, Cost of capital, Exchange rate, Fiscal drag, Harmonization reform, Income and capital gains taxes, Interest rate, Lump sum, Lump sum tax, Open economy, Personal income tax, Profit tax, Savings tax, Tax harmonization reform, Utility function, Value-added tax, VAT system, Wage tax, WP

Publication Details

Pages:

52
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1990/096
Stock No:

WPIEA0961990
ISBN:

9781451949933
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 38, No. 2, June 1991.

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