NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Empirical Analysis of Tax Reforms

Mervyn A. King

NBER Working Paper No. 1996
Issued in August 1986
NBER Program(s):   PE

Over the last decade increasing use has been made of individual household

data to analyse the gains and losses from tax reform. Much attention has

been paid to the econometric estimation of models of household responses to

taxes. But these models yield valid estimates of the welfare consequences

of tax changes only when the implied preference orderings are well behaved.

This paper discusses the nature of such conditions in detail. Where there

are rionlinearities in the budget constraint then two sets of "primal" and

"dual" conditions must be satisfied. The analysis of these conditions

yields suggestions for the specification of behavioural models and the use

of individual-specific information in the observed data.

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Document Object Identifier (DOI): 10.3386/w1996

Published: Advances in Econometrics, 1988, ed. T. Bewely, Cambridge University Press: London

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