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
Mining
Construction
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.
Transportation
Communications
Electricity, gas, sanitary
Wholesale trade
Retail trade
Banking
Insurance
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
$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
Labor
Capital
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
