TY  - JOUR
AU  - Fullerton,Don
AU  - Lyon,Andrew B.
TI  - Uncertain Parameter Values and the Choice Among Policy Options
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1111
PY  - 1987
Y2  - October 1987
UR  - http://www.nber.org/papers/w1111
L1  - http://www.nber.org/papers/w1111.pdf
N1  - Author contact info:
Don Fullerton
Department of Finance
University of Illinois
BIF Box#30 (MC520)
515 East Gregory Drive
Champaign, IL  61820
Tel: 217/244-3621
Fax: 217/244-3102
E-Mail: dfullert@illinois.edu

Andrew B. Lyon
PricewaterhouseCoopers LLP
1301 K Street, NW  Suite 800W
Washington, DC 20005
Tel: 202-414-3865
E-Mail: drew.lyon@us.pwc.com
AB  - In this paper, we use tax policy choices to illustrate and investigate the more general problem of using uncertain parameter values in models to evaluate policy choices. We show, for this tax example, how debate on an elasticity parameter translates into a debate about policy choices, andvice versa. To construct this example, we suppose that the choice among four particular tax reform options is based on a single measure of efficiency gain. We show how this gain from each reform depends upon the elasticity of saving with respect to the net rate of return. Within quite narrow and reasonable bounds for the elasticity parameter, we find regions in which each of three different tax reforms turns out to dominate the others.
ER  -