VAT Rate Dispersion and TFP Loss in China's Manufacturing Sector

Research output: Working paperDiscussion paper

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The paper studies dispersion in the effective VAT rate, a directly measurable dis­tortion, across manufacturing firms in China and assesses its impact on aggregate production efficiency through mis-allocation from 2000 to 2007. Using a structural model based on Hsieh and Klenow (2009), I find that a revenue-neutral tax reform which eliminates the dispersion in VAT rates alone produces a gain in aggregate TFP in the order of 7.9% of GDP on average in the period from 2000 to 2007.
Original languageEnglish
PublisherUWA Business School
Publication statusPublished - 2015

Publication series

NameEconomics Discussion Papers


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