Lawrence, C (2009): Identifying an Australian 'Shadow' Benefit / Cost Ratio for Public Projects.
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This paper examines the social opportunity cost of a hypothetical public project in Australia and compares these values with the cost of the project as measured by factor prices. Since 2001, the Australian taxation system has included an ad valorem tax, the Goods and Services Tax, however relatively little analysis of the impact of this tax on public project evaluation methods has been undertaken. This tax creates divergences between social opportunity cost and conventional cost measures. Therefore it is recommended that shadow prices be applied to pubic projects. Following Campbell (1975), a shadow price can be introduced into Australian project evaluation in the form of a cut-off benefit cost ratio. The calculations reported on in the paper indicate that this ratio lies between 1 and 1.3 for public projects in Australia.
|Item Type:||MPRA Paper|
|Original Title:||Identifying an Australian 'Shadow' Benefit / Cost Ratio for Public Projects|
|Keywords:||allocative efficiency, cost benefit analysis, efficiency, optimal taxation, project evaluation, social discount rate|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation
H - Public Economics > H4 - Publicly Provided Goods > H43 - Project Evaluation; Social Discount Rate
D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency; Cost-Benefit Analysis
|Depositing User:||Craig Lawrence|
|Date Deposited:||11. Feb 2009 12:08|
|Last Modified:||16. Feb 2013 06:38|
 Bureau of Transport Economics (1999) Facts and Furphies in Cost Benefit Analysis: Transport, Report 100, AusInfo, ISBN 0-642-42239-7
 Campbell, H.F. (1975) ‘A Benefit/Cost Rule for Evaluating Public Projects in Canada’, Canadian Public Policy, Spring 1975, pp.171-5.
 Campbell, H.F. and Brown, R.P.C. (2003) ‘A Multiple Account Framework for Cost- Benefit Analysis’, Discussion Paper No. 328, June 2003, ISSN 1446-5523
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