Introduction Empirical Public finance and Dynamic models context requires inputs from empirically estimated St Designing a tax and welfare benefit system in a 2nd be parameters The literature tends to focus on estimation of commodity and labour supply elasticities, which are the basic variables that respond to taxes and benefits However, individuals are likely to change behaviour in a number of different ways faced with a new regime of taxes and benefitsIntroduction Empirical Public Finance and Dynamic Models • Designing a tax and welfare benefit system in a 2nd best context requires inputs from empirically estimated parameters • The literature tends to focus on estimation of commodity and labour supply elasticities, which are the basic variables that respond to taxes and benefits. • However, individuals are likely to change behaviour in a number of different ways faced with a new regime of taxes and benefits