Gavrilova, Evelina; Zoutman, Floris T.; Hopland, Arnt-Ove - 2017
We show that an insight from taxation theory allows identification of both the supply and demand elasticities with only … and demand. We develop a TSLS estimator for both elasticities, a test to assess instrument strength and a test for the RER … restriction. Under the Ramsey Exclusion Restriction (RER) a tax reform can serve to simultaneously identify elasticities of supply …