- Economics - Research Publications
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ItemDiscounting and the Time Preference Rate:an introductionCreedy, J. ; Guest, R. ( 2007-04)This paper provides an introduction to the evaluation of alternativetime streams of consumption and the closely related concept oftime preference. The potential sensitivity of comparisons, especiallyto the choice of time preference rate and elasticity of marginal valuation,is demonstrated. The nature of time preference, based on anaxiomatic approach, is then discussed. The analysis of optimisationover time leads to the concept of the social time preference rate, and adifficulty with using this rate is highlighted. Finally, complications introducedby non-income differences between individuals are examined.Emphasis is placed on the central role of value judgements.
ItemChanges in the taxation of superannuation: macroeconomic and welfare effectsCreedy, J. ; Guest, R. ( 2007-02)This paper provides an applied general equilibrium analysis of several alternative taxationregimes applying to superannuation. It is motivated by the decision, announced by theAustralian Government in its 2006 Budget, to exempt from tax all superannuation benefitsreceived by recipients over 60 years of age. The analysis focuses on the implications of thisand other superannuation tax regimes for intergenerational equity, national living standards,labour supply, saving and social welfare. The method of analysis is simulation of an openeconomy overlapping generations CGE model, calibrated to Australia.
ItemChoosing the tax rate in a linear income tax structure: an introductionCreedy, J. ( 2007-09)This paper provides an introduction to modelling the choice of linearincome tax rate in both majority voting and social welfare maximisingcontexts. Although the basic problem in each case — of findingthe most preferred tax for the median voter and the welfare maximisingtax for an independent judge or decision-maker — can be simplystated, it is usually not possible to obtain explicit solutions even forsimple assumptions about preferences and population heterogeneity.The present paper instead gives special attention to a formulation ofthe required conditions in terms of easily interpreted magnitudes, theelasticity of average earnings with respect to the tax rate and a measureof inequality. The inequality measure takes the same basic formin each model (depending either on median earnings or a weightedaverage of earnings, where the weights depend on value judgementsregarding inequality aversion. The approach enables the comparativestatic effects of a range of parameter changes to be considered. Theresults are reinforced using numerical examples based on the constantelasticity of substitution utility function.