Posted on 02/03/2005 9:54:12 AM PST by EternalVigilance
So why do you say prices will drop x% in your posts?
Percentage is a relative measure and because the drop is expressed relative to the baseline(the '96 income tax system) in the Jorgenson studies.
I suppose we could say the NRST produces a drop in producer prices initially drops 2.9 times that of the Flat Tax under income '96 tax law as reported in the '98 Jorgenson study increasing to 8.3 times the drop of the Flat tax by 2020.
"7. The inter-temporal price system provides the mechanism for re-allocations of resources in our simulations. Figures 10 and 11 give the impacts of the tax reforms on the prices of investment goods and consumption goods and services. Under the Flat Tax the price of investment goods drops by more that 6.8 per cent in 1996 and the price decline continues, falling only modestly to a little over six percent by 2020. The Sales Tax produces a reduction in investment goods prices exceeding twenty percent in 1996, rising gradually to between twenty-five and thirty percent over the period 2000-2020.
Can you show me a paper that models a NRST vs. a VAT?
No but I can show in the '97 Jorgenson JCT study under '96 income tax law conditions, that the VAT and Flat Tax are essentially the same in all factors measured including their effect on producer prices.
Amen!!! I have been trying to get those points through their thick heads on these threads since 1998!
Income effect is the primary reason why the initial impulse of labor supply decays with time instead of sticking at its initial impulsive levels with attendant economic expansion arising out of consequent return to consumption away from high initial rates of investment as is clearly seen in the '99 Jorgenson results.Indeed.
No but I can show in the '97 Jorgenson JCT study under '96 income tax law conditions, that the VAT and Flat Tax are essentially the same in all factors measured including their effect on producer prices.1997? That was before they perfected their model.
Never fear, the a near equal result for VAT and flat tax would occur in any model as they address all levels of production in the same way.
Class warfare is what allows this. Removing the burden from business has never been possible without hysterical attacks from the RATs. I have doubt that it can be done because of this.
There are few revolutions in history for good reason. This is so revolutionary that I don't see it happening until all fundamental questions are addressed and satisfactorily answered. And the issues wrt Real estate will probably be the ones which stop it.
Good. That escaped my attention.
An infinite-horizon model like Jorgenson's has no income effect.
It most certainly displays all the characteristics of the income effect that arise out of the dynamic supply demand relations inherent to the empirical parameters of the model.
Income effect is inherent witin the time series relations to which the Jorgenson IGEM is parameterised.
Every session they have legislation like this and it goes nowhere. It's like asking a Hollywood star to go to minimum wage to help the homeless....they smile and then there's this snag where the legislation goes nowhere.
Hope springs eternal......but I doubt that the IRS will ever be closed by peaceful means....
As concerns the current ranges for time endowment factor which is the focus of your paper:
Researchers have used an extraordinary variety of values for ø . For example, Ballard, Fullerton, Shoven, and Whalley (1985, p. 135) choose a value of 1.75 for ø , "...to reflect that individuals typically work a forty-hour [week], out of a possible seventy-hour week." Jensen and Rutherford (1999) set ø=1.5 Fullerton and Rogers (1993) specify a time endowment of 4000 hours per year, which yields a value of ø of about 2.0 for several of their consumer groups. Auerbach and Kotlikoff (1987, p. 52) set ø to 2.5, to represent "...a full-time labor endowment of 5000 hours per year [in which workers are assumed to] work 2000 hours per year, or 40 hours per week." Greenwood and Huffman (1991, p. 175) use a value of approximately 3.846 for ø : "This number corresponds to the average ratio of total hours worked to total nonsleeping hours of the working age population observed in the U.S. data." In the model of Jorgenson and Willxcoxen (1998), the average value of ø is about 4.1. 2 Mendoza and Tesar (1998) set ø equal to 5.0.
Jorgenson's empirical values are hardly outside the realm of other's findings or even reasonability for what it represents.
Interestingly the author of the paper makes some interesting points about characterizing the time endowment factor, and setting it to some value that tunes "behavioural elasticities" for modeling purposes to provide answers in bounds reasonable to the researcher (i.e. presumed result), unfortunately in doing so it renders the factor meaningless as a real world representation of time in work as a ratio to hours available for labor.
What is missed in the paper is that Jorgenson parameterizes his IGEM on the basis of response of the IGEM relative to an empirical match of baseline data against a historical economic data series over a broad time frame. This results in a best estimate value of results matched to real world performance, rather than the tuning procedure of calibration on single year data that most IGEMs are set against. While this may result in values of some specific technical parameters that others would not choose on an ad-hoc basis that does not invalidate the value found in an empirical fit. Data must drive the result not intuition or presumption.
It is of note in regard to Jorgenson's methodology the author points out:
"I have criticized Auerbach and his colleagues for choosing a value of ø that leads to excessively large swings of labor supply. However, the calibration procedures of Ballard and Kim are just as problematic. It appears that the problem stems from an overly zealous attempt to replicate the benchmark data. In order to replicate every aspect of the data precisely in an OLG model, the researcher may have to pay a heavy price in terms of other aspects of the model, such as the time endowment, with its subsequent effects on labor-supply elasticities. Auerbach, Kotlikoff, and their colleagues have shown a willingness to settle for what might be called “approximate replication.” Given the great complexity of an OLG model of this type, this is probably the best way to go.
As opposed to the intent of the Author's paper:
Until now, the most common practice among simulation modelers has been to choose the time-endowment parameter in a fairly arbitrary way, based on ad hoc judgments about the number of hours available. In this paper, I have argued that this practice should give way to a new emphasis on choosing the time-endowment parameter for the purpose of controlling the behavioral elasticities implied by the model.
Since the parameterization procedure used in Jorgenson's IGEM is based in empirical matching of the IGEM baseline to a historical data series, the above hardly characterises Jorgenson's approach.
Nor does Jorgenson's approach yield invalid parameters, especially when the parameter reasonably matches a rational interpretation for a functional definition.
e.g. an average ~4 hours per 16hr wake period is spent in work and work related activities by the working age population according to BLS time use survey data yielding a time allotment factor of ~4.
Thus
"Greenwood and Huffman (1991, p. 175) use a value of approximately 3.846 for ø : "This number corresponds to the average ratio of total hours worked to total nonsleeping hours of the working age population observed in the U.S. data." In the model of Jorgenson and Willxcoxen (1998), the average value of ø is about 4.1"
is right in the ballpark of real world data.
Results rooted in empirical measurement do not give room to fudge in manner the author would have researchers engage in to trim results to pre-conceived expectations.
Precisely so and exactly the reason Marx and Engles were so enamored of the progressive income tax. Why do we, the folks who stood in the way of international communism, continue to suffer under a tax system endorsed by those folks?
Removing the burden from business has never been possible without hysterical attacks from the RATs.
Well, the last time I looked the RATs had exactly zero power in Washington for the first time in MY lifetime and mind you I've been here for a while! Let them squeal and yell to their hearts content! We may never again have so great an opportunity to do what's RIGHT and thus need to get it done ASAP!
Greenwood and Huffman (1991, p. 175) use a value of approximately 3.846 for ø : "This number corresponds to the average ratio of total hours worked to total nonsleeping hours of the working age population observed in the U.S. data." In the model of Jorgenson and Willxcoxen (1998), the average value of ø is about 4.1.So 3.846 for ø is the ratio of total hours worked to total nonsleeping hours of the working age population. That allows for no meals, no showers, no driving to work, etc. Basically just sleep and time available for work equals 3.846. Jorgenson uses 4.1 for ø! That means to have as much time to work as Jorgenson allots we would not only have to forgo showers, eating, etc. but also forgo sleep! AG doesn't even question this because if he did he might have to reevaluate his position, and he can't have that.
"Jorgenson's empirical values are hardly outside the realm of other's findings or even reasonability for what it represents."
But Jorgenson's time endowment factor isn't based on empirical values. It's arbitrarily set.
What is missed in the paper is that Jorgenson parameterizes his IGEM on the basis of response of the IGEM relative to an empirical match of baseline data against a historical economic data series over a broad time frame.Wow, that sounds so good. It's almost like you are very knowledgeable on the IGEM model. It's amazing that just yesterday you thought it was the ITGEM model. Again, the time endowment isn't based on empirical data so this is all just you blathering to try to make it look like you know what you are talking about.
This results in a best estimate value of results matched to real world performance, rather than the tuning procedure of calibration on single year data that most IGEMs are set against. While this may result in values of some specific technical parameters that others would not choose on an ad-hoc basis that does not invalidate the value found in an empirical fit. Data must drive the result not intuition or presumption.I agree, so why did Jorgenson & Wilcoxen use intuition and presumption in choosing their time endowment factor? [Have you even looked at the source data and formulas for the IGEM model?]
Since the parameterization procedure used in Jorgenson's IGEM is based in empirical matching of the IGEM baseline to a historical data series, the above hardly characterises Jorgenson's approach.You're making stuff up again! The IGEM time endowment factor isn't based on empirical data and where exactly would Jorgenson & Wilcoxen get empirical data representing the switch from an income/payroll tax to a NRST?
e.g. an average ~4 hours per 16hr wake period is spent in work and work related activities by the working age population according to BLS time use survey data yielding a time allotment factor of ~4.You obviously have no clue what the time endowment represents. It's how much time does a person have to use for leisure or work divided by how much work they do. A typical person does not have 16 hours a day to allot to leisure and work. They must brush their teeth and things like eating and bathing. And the typical person does not work 4 hours a day. Me personally, I probably have 10 hours a day to devote to leisure and work (I have a toddler) and I work 8 hours a day, so my time endowment factor is 1.25 (the number the author suggests). For it to be 4.1 like Jorgenson's parameter I would have to be willing to work 7 days a week and only get 4 hours of sleep a week!
At what? Seems to me that you spend the bulk of your time right here on FreeRepublic. Is THAT your job? If so, who's paying you to do that? Inquiring minds and all that stuff you know!
No. I really don't because it is TOTALLY irrelevant to the discussion at hand. I mentioned it simply to illustrate just how silly this {A typical person does not have 16 hours a day to allot to leisure and work. They must brush their teeth and things like eating and bathing. And the typical person does not work 4 hours a day. Me personally, I probably have 10 hours a day to devote to leisure and work (I have a toddler) and I work 8 hours a day, so my time endowment factor is 1.25} is UNLESS of course your work IS posting on Freerepublic.
I mentioned it simply to illustrate just how silly thisIt's not silly. What's silly is to think a person has 16 hours a day to use at their leisure.
is UNLESS of course your work IS posting on Freerepublic.Like most people, I'm at work 9 hours a day (8-5) for 8 hours of work. I eat lunch at my desk a have and few breaks during the day. If I post during the day it's during my time.
Unbeknownst to you obviously there are a great many folks in THIS country who WORK 16 hours a day with great regularity. Eating, sleeping, bathing, and travel to and from their work place, ALL come out of the other 8 available hours. Of course they could not DO that without someone else in the picture taking care of the home front.
I guess it all comes down to how you define work.
What's silly is to think a person has 16 hours a day to use at their leisure.
No THAT I can agree with.
There is obviously plenty of "my time" in your case.
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