Survey of dynamic computational general equilibrium models for tax policy evaluation

Abstract Perhaps the most active area of research in the field of computable general equilibrium tax models involves the addition of genuine dynamics to the behavior of both consumers and producers. Such model enhancement in the direction of dynamics is necessary to satisfactorily capture the effects of such tax alternatives as the adoption of an expenditure tax or the integration of the corporate and personal tax systems. This paper surveys 11 models that include at least some dynamics in their structure. It treats the issue of incorporating dynamics into the models, and also discusses different computational and implementation approaches. Finally, it includes a dynamic computational general equilibrium model of corporate tax integration that indicates the potential importance of modeling dynamic choice.

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