Publication details
Tax Changes Effects on the Czech Economy
| Authors | |
|---|---|
| Year of publication | 2020 |
| Type | Article in Proceedings |
| Conference | Proceedings of the International Scientific Conference ECONOMIC AND SOCIAL POLICY |
| MU Faculty or unit | |
| Citation | |
| Web | https://www.narodacek.cz/conference-proceedings-2020/ |
| Keywords | Tax reduction; the Czech Republic; DSGE; labor; capital |
| Description | Today, economies are struggling with the consequences and uncertainty caused by the pandemic of novel coronavirus. Economic subjects turn their attention to the government and ask for help. Government budgets will face a real challenge in the next years, due to current high demand for the spending and expected decline in income. This paper investigates the current condition of public finances in the Czech Republic and the possible effects on economy by decreasing direct taxes on labor and capital. Simple DSGE model of small and closed economy with 3 sectors is calibrated using data from 2018 and stochastic analysis is performed. It is shown that economy is more sensitive to the shocks on labor than on capital income taxes. Results support the tax reform of decreasing labor taxes for which Czechia is waiting for long time. |
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