A Regional Model of Growth Oriented Fiscal Policy: An Application to Georgia and Its Competitor States

A number of U.S. states are considering tax reforms that would significantly reduce or eliminate income taxes and recover the lost revenue by increasing its sales taxes. To gauge the economic effects of such reforms, we construct a multi-regional, dynamic, open economy, general equilibrium (CGE) model. Our model is an advancement over existing regional CGE models used to simulate the impact of state tax reforms in the U.S. context. We simulate the impact of a variety of tax reforms and find that Georgia’s economy benefits but at the expense of the five comparison states we include.dynamic simulation models, fundamental tax refor