Public finance-finances publiques vol:47 pages:256-270
We present some results of empirical marginal tax reform analysis within a non-Walrasian general equilibrium model, distinguishing different macroeconomic regimes. We compute the marginal welfare cost of a tax on labour income and of the indirect tax rates for 15 commodities. We use Belgian data, calibrated for 1980. Assumptions about the general equilibrium structure of the economy have a crucial impact on the results. One cannot escape the problem of determining the macroeconomic regime in which the economy finds itself. Since regimes change over time, one can wonder whether the fine tuning hinted at by our results is practically feasible.