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Optimum taxation and shadow pricing in a developing economy (Inglês)

This paper analyzes the determinants of optimal tax and investment policies in a developing country and investigates how those policies shold respond to a sustained rise in the price of imported intermediate inputs such as oil. The effect on the terms of trade between industry and agriculture are also reported. It combines in one model the tax and investment policies on shadow pricing and incentives in the presence of tax restrictions with the notion of labour market imperfection central to contributions on the dual economy. This general model is then subjected to external shocks. The numerical analysis demonstrates that the optimal tax structure depends crucially on the extent to which agriculture can be taxed and on the assumptions made about the distribution of land ownership among rural and urban residents. Whenever tax restrictions are present, increased prices of imported energy reduce the size of government subsidies. There is also a suggestion that increases in the energy price should lead to a reduction in the optimal rate of investment.


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    Heady, Christopher Mitra, Pradeep K.

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    Optimum taxation and shadow pricing in a developing economy

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    shadow price;urban consumer;producer price;energy price;Rural Sector;rights to land;increase in energy price;rural consumer;capital stock;tax rate;base case;domestic capital goods industry;steady state capital stock;reduction in energy import;marginal product of capital;simple general equilibrium model;rural to urban migration;constant elasticity of substitution;optimal investment path;urban sector;balance of payment;terms of trade;rate of investment;taxation;flow of resource;social opportunity costs;distribution of land;lump sum tax;price of land;transfer of resource;increase in land;choice of technique;social welfare function;price of labor;income and expenditure;ownership of land;income from land;class of model;income from labour;social accounting matrix;direction of trade;rates of interest;increased oil prices;price of oil;optimal tax structure;shadow wage rate;energy price changes;price of energy;optimal tax policy;indirect tax system;optimal tax rate;reduction in consumption;increase in consumption;return on investment;absence of migration;Balance of Trade;effects of shocks;net social value;tax on labour;patterns of production;calculation of tax;urban resident;urban producer;consumer price;rural area;tax rule;rural resident;budget surplus;tax burden;agricultural sector;market price;labour market;relative price;urban migrant;supply side;public ownership;rural-urban migration;production rule;optimal policy;manufacturing sector;labour force;real income;world price;urban labour;urban labor;negative tax;national income;positive tax;urban tax;optimization problem;tax reported;intermediate input;numerical analysis;rural labor;rural food;budget constraint;export earnings;production efficiency;urban household;uniform tax;consumption bundle;production activity;basic model;shadow value;investment policy;public production;current consumption;empirical evidence;consumer good;capital ownership;external shock;property right;government control;production inefficiency;Agriculture;future consumption;marketing board;urban service;food production;government support;consumption subsidies;agricultural producer;income subsidy;industrial structure;tax revenue;world energy;static effect;agricultural product;section show;import substitution;high capital;urban production;manufactured goods;government budget;investment good;urban worker;foreign country;investment behaviour;rural employment;tax land;absolute reduction;agricultural output;consumption level;public activity;utility level;commodity subsidy;dynamic version;internal trade;public consumption;taxation revenue;shadow pricing;government revenue;government subsidy;efficient taxation;alternative policy;internal transaction;government objective;organizing production;rural population;research assistance;cost benefit;dual economy;constant return;agricultural taxation;rural market;service agency;cost-benefit analysis;electricity authority;empirical work;public policy;differential pricing;factor inputs;marketed food;Labour Mobility;urban food;public finance;produce food;dynamic model;production adjustment;pricing policy;numerical simulation;present study;consumption good;rural electricity;urban electricity;initial capital;urban price;discriminatory manner;profit tax;trade regime;utility function;potential migrant;income accruing;individual utility;open economy;food trade;national product;manufacturing industry;public capital;investment increase;private investment;production function;urban consumption;government intervention;urban inequality;discriminatory pricing;land income;rural price;Land Ownership;optimal tariff;consumer tax;



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