Reforming Commodity Taxes : Efficiency and Equality Considerations

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We estimated 25 consumer demand systems for five cohorts (20s, 30s, 40s ,50s and more than 60 generations) from National Survey on Consumption data of 1989-2004. We examined the transition of tastes with respect to age profile based on our estimates.Our estimation shows that the tastes changes significantly over the different cohorts and that effects of taxation must be examined carefully given the differences between the cohorts.The use of aggregate data to calculate cost of living gave us a limited result that we can calculate consumer's utility with money unit.Also, the different effects of a consumption tax on each age cohort can be examined in our model.