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Cost-benefit analysis and the shadow value of government revenue

Jones, Chris


This paper proves the Hatta (1977) coefficient is the shadow value of government revenue - it is a scaling coefficient that converts efficiency effects from marginal policy changes into dollar changes in utility. The decomposition is generalised to economies with heterogenous consumers and variable producer prices to show (a) the Foster and Sonnenschein (1970) effect, where extra income reduces consumer utility, makes the shadow value of government revenue negative; and (b) when Bruce and...[Show more]

CollectionsANU Research Publications
Date published: 2003
Type: Working/Technical Paper


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