In deriving the elements of Δ
􀀄
w for the CES example in Gahvari (2010), the
sign of the income term in the Slutsky equation is as negative rather than positive.
Specifically, instead of writing ∂x􀀄 / ∂p = ∂x / ∂p+ x∂x / ∂M the expression is
written as ∂x􀀄 / ∂p = ∂x / ∂p− x∂x / ∂M (and similarly for ∂x􀀄 / ∂q and ∂y􀀄 / ∂q ).
This does not change any of the paper’s results including the point that the example
illustrated. Its sole import is wrong algebraic expressions for the optimal tax rates in
this example. The entire subsection with corrected expressions is as follows.