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Add HSV tax estimation #31

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john-p-ryan
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Estimates the marginal tax rates using the functional form from Heathcote, Storesletten, Violante (2017). That is,

$$T(z) = z - \lambda z^{-\tau}$$

The estimate for $\tau$ is about .08 to .1 depending on the sample, which is lower than the literature, but otherwise is consistent.

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@john-p-ryan Thanks for this PR! Can you resolve the conflicts with the master branch and then I'll merge?

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Sorry for the conflict, should be resolved now. It was just regarding the normalization of the weights. It should be normalized using the density rather than just the sum.

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codecov-commenter commented Jan 7, 2025

Codecov Report

Attention: Patch coverage is 50.00000% with 13 lines in your changes missing coverage. Please review.

Project coverage is 51.63%. Comparing base (10985c1) to head (8f9e24a).
Report is 27 commits behind head on main.

Files with missing lines Patch % Lines
iot/inverse_optimal_tax.py 50.00% 13 Missing ⚠️

❗ There is a different number of reports uploaded between BASE (10985c1) and HEAD (8f9e24a). Click for more details.

HEAD has 1 upload less than BASE
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unittests 3 2
Additional details and impacted files
@@             Coverage Diff             @@
##             main      #31       +/-   ##
===========================================
- Coverage   72.81%   51.63%   -21.19%     
===========================================
  Files           3        3               
  Lines         103      153       +50     
===========================================
+ Hits           75       79        +4     
- Misses         28       74       +46     
Flag Coverage Δ
unittests 51.63% <50.00%> (-21.19%) ⬇️

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3 participants