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GTAP Resource #3202

"An Economy-wide Analysis of Consumption Voucher Policy in Taiwan"
by Lee, Duuhwa, Ching-Cheng Chang and Shih-Hsun Hsu

To stimulate household consumption and economic growth in Taiwan during the financial crisis, the government proposes an economic stimulus act entitled with ¡§Special Act for the Distribution of Consumption Voucher to Revitalize the Economy¡¨ in December 2008, and the budget of the plan is NT$ 86.65 billion (nearly 2.73 billion US dollars) which is equivalent to 0.65% of Taiwans GDP in 2008. The plan distribute vouchers worth NT$3,600 (113.4 US dollars) to each of the citizens.
The model we utilized in this study is Taiwan general equilibrium model (TAIGEM), a multisectoral, computable general equilibrium (CGE) model of the Taiwan¡¦s economy, developed specifically to analyze climate change response issues. TAIGEM is derived from the Australian ORANI model. This study considers the survey data on how consumers use the extra money, and their effects on the sectors and economy. Database will be updated to 2009 to calibrate baseline with financial crisis.
Simulation results demonstrated that the consumption voucher policy will increase real GDP growth rate by 0.28 to 0.43 percent in 2009. The commodity trading, electronic product, and transport and communication industries have benefited greatly from consumption voucher plan. In view of employment benefit, the commodity trading, other service, food and hotel service, clothing and electronic product industries have benefited from the distribution of consumption voucher. To compare the effects of different policies, the scenario design also includes tax cut and tax rebate policies (like the policy used in USA where every taxpayer will get $300 to $600 US dollars in a tax rebate check). We also consider the promotion effect, turnover effect and substitution effect for different scenarios. The Ricardian Equivalence proposition will be discussed.

Keywords: Consumption voucher, CGE, financial crisis, tax cut, tax rebate.

Resource Details (Export Citation) GTAP Keywords
Category: 2010 Conference Paper
Status: Published
By/In: Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia
Date: 2010
Created: Hsu, S. (2/28/2010)
Updated: Hsu, S. (2/28/2010)
Visits: 3,621
- Economic growth
- Asia (East)

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