Empirical Macromodels Under Test

Buscher, Herbert S. ; Buslei, Hermann ; Göggelmann, Klaus ; Koschel, Henrike ; Schmidt, Tobias F. N. ; Steiner, Viktor ; Winker, Peter

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URL: https://ub-madoc.bib.uni-mannheim.de/1036
URN: urn:nbn:de:bsz:180-madoc-10369
Document Type: Working paper
Year of publication: 2000
The title of a journal, publication series: Discussion Papers / Institut für Volkswirtschaftslehre und Statistik
Volume: 575
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Institut für Volkswirtschaftslehre und Statistik > Discussion Papers
Subject: 330 Economics
Classification: JEL: C53 C50 C68 H55 E17 ,
Subject headings (SWD): Deutschland , Arbeitsmarkt , General Equilibrium Environmental Model , Steuer
Abstract: This paper examines the employment effects of a revenue-neutral cut in the social security contribution rate in Germany by running policy simulations in four different types of macroeconomic models. Two models are based on time-series data where the labor market is modeled basically demand oriented, whereas the other two models are supply oriented computable general equilibrium models. While the predicted employment effects of the cut in the contribution rate are qualitatively similar across models three years after the cut, they differ considerably in magnitude. These differences can to a large extent be attributed to differences in the basic structure of the models. Of special importance is how prices and wages react in each model to the cut in the social security tax rate on one side, and the necessary increase of the indirect tax rate on the other side. The results, therefore, provide a guideline for assessing the outcome of policy simulations and for the further development of macroeconomic models suitable for this kind of experiments.
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