Extension of the EUROMOD-ITT tool

Background

The project is conducted jointly by the Department of Economics of the University of Leuven (in the following “KU Leuven”) and the Institute for Social and Economic Research (ISER) at the University of Essex (hereafter “Essex”). It is led and coordinated by KU Leuven.

Description

The aim of this project is to adapt and improve the indirect tax handling of EUROMOD further, by making use of the EUROSTAT HBS data for all countries of the European Union for which no considerate data issues exist. The project consists of four tasks set out by the Joint Research Centre.
In Task 1 we analyse and prepare the HBS and SILC data, and design the code to perform the imputation of expenditures into SILC through distance matching.
In Task 2 we collect the indirect tax parameters, as well as the goods and services subject to reduced VAT for all countries in the exercise, and we insert this data into EUROMOD. This task also sets out a complete macro-validation of the results.
Task 3 focuses on EUROMOD, and the way the simulations are handled. It makes a number of improvements that solve some consistency issues, and increases the user-friendliness considerably when it comes to working with the ITT in the framework of e.g. a labour supply model. The model is also expanded with a tax incidence shifter, allowing the researcher to change the how much of the indirect taxes are passed through onto the consumer.
Finally, Task 4 offers the user the option to easily fill-in the volume in indirect taxes not simulated by EUROMOD at the macro-level, while leaving the purchasing power effects at the micro-level unchanged.

Outputs

The outputs of the project include the model, input dataset and model documentation