The impact of the 2008 German corporate tax reform: A dynamic CGE analysis

Michael Stimmelmayr, Doina Radulescu

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17 Citations (Scopus)

Abstract

In this paper we develop the dynamic CGE model, ifoMod, which is designed to analyse the impact of fundamental tax reforms and in particular capital income tax reforms for Germany. The model is in line with neoclassical growth theory and features all important behavioural interactions between the four major building blocks of an economy including the firm and household sector, the government and the rest of the world. We consider firms of different legal forms which all face an intertemporal investment problem, a financing problem w.r.t. the optimal choice of debt and equity financing as well as a factor input problem when deciding on the optimal amount of different skill types of labour employed. We show the impact of different types of taxes on the behavioural margins of firms and households. The conducted simulation shows the impact of the latest German corporate tax reform of 2008 on the German macroeconomic variables such as investments, GDP, consumption and household's welfare.
Original languageEnglish
Pages (from-to)454-467
Number of pages14
JournalEconomic Modelling
Volume27
Issue number1
Early online date25 Nov 2009
DOIs
Publication statusPublished - 1 Jan 2010

Keywords

  • Capital income taxation Computable general equilibrium modelling Welfare analysis

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