How STAMP works

Read details of the model here in PDF format.

STAMP and LAMP are CGE (computable generalized equilibrium) models that account for and analyze the economic effects of tax policy changes. A CGE model is “computable” in the sense that it requires the solution of a system of nonlinear simultaneous equations for each policy simulation. It is “general” because it allows for the interdependence and interaction of all markets, their prices and their quantities. It is in “equilibrium” because supply is assumed to equal demand in each market.

This means that there are no “Keynesian” elements in the model. STAMP/LAMP is a market-clearing model. Tax policy changes are shown to affect economic activity through their effects on the prices of outputs and of the factors of production (labor and capital) that enter into those outputs.

In building the model, we first construct a “baseline” scenario in which we solve the model for five years into the future on the assumption that current tax law remains unchanged. This scenario provides the basis for an Excel spreadsheet, in which we can enter hypothetical, alternative tax-law changes. The spreadsheet executes an order (received over the Internet by the BHI server) to re-solve the model for the indicated tax-law changes. The effects on the model’s variables are then displayed on the spreadsheet.

The model provides values of the following variables for both the baseline and the tax-change scenario:

  • Gross State or Area product, by expenditure type ­ consumption, gross investment, government purchases and net exports to the rest of the world;
  • Savings, by type;
  • Aggregate income, by type (wages and capital income);
  • Tax revenues and government expenditures, by type;
  • Employment, by sector;
  • Private capital stock, by sector;
  • Net investment, by sector;
  • Wages and capital income, by sector of origin;
  • Inter-sectoral flows of final and intermediate goods.


  • Industrial Sectors
    Agriculture, forestry and fishing
    Food and tobacco products
    Textiles and apparel
    Paper and publishing
    Chemicals, petroleum, rubber, plastics
    Building materials and furniture
    Primary and fabricated metal
    Industrial machinery and equipment
    Electronic and electrical equipment
    Transportation equipment & misc.
    Electricity, gas, sanitary
    Wholesale trade
    Retail trade
    Real estate
    Hotels, amusements, motion pictures
    Personal and repair services
    Business services
    Health services
    Eating, drinking, misc., services


  • Household Sectors
    (Annual income per household)
    $10,000 – 24,999
    $25,000 – 49,999
    $50,000 – 74,999
    $75,000 – 99,999
    $100,000 – 149,999
    $150,000 and up


  • Factor Sectors

Investment Sectors

Rest of the world Sector

Government Sectors

  • Federal Government Receipts
    Social security
    Federal personal income tax
    Federal corporate income tax
    Other federal taxes
  • Federal Government Expenditures
    Federal non-defense spending
    Federal defense spending
  • State & Local Government Receipts
    Sales tax
    Gross receipts tax
    Tax on motor fuel
    Motor vehicle tax
    Franchise tax
    Corporate income tax
    Tax on oil and gas production
    Tax on tobacco
    Insurance premium tax
    Tax on alcohol
    Personal income tax
    Inheritance tax
    Fees, licenses, permits
    Workers’ compensation and disability
  • State & Local Government Expenditures
    Spending on education
    Spending on health & welfare
    Spending on public safety
    Spending on infrastructure
    Spending, other

Read more:
The Economics of STAMP
The CGE team
STAMP in the states
Recent work