Professor Lu Yi from the School of Economics and Management of Tsinghua University was Invited to the Yangtze River Forum

On September 20, 2019, Lu Yi, professor at the School of Economics and Management of Tsinghua University, gave an academic report entitled “Value Added Tax and Spatial Misallocation” at the 112th lecture of the Yangtze River Forum of Wuhan University.

Professor Lu Yi reported on the impact of regional differences in VAT on welfare and economic growth. Based on the spatial general equilibrium model, this study made a counterfactual simulation, estimating the effect of welfare and economic growth under the same scenario where the actual VAT rate was the same among regions, and it found that VAT caused losses in welfare and real GDP, and VAT preferential policy has alleviated this loss. The VAT reform from 2018 to 2019 has effectively increased China's real GDP, and the reduction of the upstream industry VAT has increased China's real GDP.