The Global Integrated Monetary and Fiscal model (GIMF) is a multi-region, forward-looking,
DSGE model developed by the Economic Modeling Division of the IMF for policy analysis and
international economic research. This paper uses GIMF to illustrate when a destination-based
cash-flow tax is equivalent to a combination of a consumption tax and a labor subsidy, as the
latter combination have been advocated as proxies for the implementation of destination-based
cash-flow taxes. The paper documents the conditions under which both types of taxes are
identical and how the equivalence in terms of the real economy and tax revenue responses can be
broken, namely after the introduction of finitely lived consumers that value government debt as
net wealth (real economy) and the introduction of untaxed government expenditure (tax
revenue).
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