Sticker Shocks: Using VAT Changes to Estimate Upper-Level Elasticities of Substitution
利用1996至2015年25个欧盟国家74种商品和服务的增值税税率变化数据，估计了嵌套CES偏好下商品与服务之间的上层替代弹性，发现增值税转嫁率在0.4到0.7之间，对应替代弹性从1到3不等。
We estimate the upper-level elasticity of substitution between goods and services of a nested aggregate CES preference specification. We show how this elasticity can be derived from the long-run response of the relative price of a good to a change in its VAT rate. We estimate this elasticity using new data on changes in VAT rates across 74 goods and services for 25 European Union countries from 1996 through 2015. Depending on the level of aggregation, we find a VAT pass-through rate between 0.4 and 0.7. This implies an upper-level elasticity of 3, at the lowest level of aggregation with 74 categories, and 1 (Cobb–Douglas preferences) at a high level of aggregation that distinguishes 10 categories of goods and services.