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The paper studies dispersion in the effective VAT rate, a directly measurable distortion, across manufacturing firms in China and assesses its impact on aggregate production efficiency through misallocation from 2000… Click to show full abstract
The paper studies dispersion in the effective VAT rate, a directly measurable distortion, across manufacturing firms in China and assesses its impact on aggregate production efficiency through misallocation from 2000 to 2007. Using a model based on Hsieh and Klenow (2009), I find that a revenue-neutral tax reform which eliminates the dispersion in VAT rates alone produces a gain in aggregate TFP in the order of 7.9% of GDP on average in the period 2000 to 2007.
Keywords:
vat;
rate dispersion;
vat rate;
manufacturing
Journal Title: Economics Letters
Year Published: 2017
Link to full text (if available)
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Journal Title: Economics Letters
Year Published: 2017
Link to full text (if available)
Share on Social Media: Sign Up to like & get
recommendations!