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An Applied General Equilibrium Model to Assess the Impact of National Tax Changes on a Regional Economy

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Abstract

This paper presents two versions of an applied general equilibrium model for the regional economy of Andalusia, Spain, that differ in the Public Sector behavior. We intend to exemplify the use of a model with these characteristics to analyze the impact that the reform of the personal income tax (Act 40/98) implemented in Spain as a whole would have had on the Andalusian region in particular. Such an important tax reform is bound to affect the behavior of the agents in this economy, both in the microeconomic and the derived macroeconomic spheres. The general character of the tax reform under analysis and the relations among the different economic agents advise us to use models with these characteristics to study the effects of this reform. The models is of the neoclassical variety and include not only the productive sectors of the economy but also the foreign sector and the government, which are usually absent from theoretical general equilibrium models. Both versions of the model are calibrated by using a Social Accounting Matrix of Andalusia for 1995.

Suggested Citation

  • M. Alejandro Cardenete & Ferran Sancho, 2002. "An Applied General Equilibrium Model to Assess the Impact of National Tax Changes on a Regional Economy," Economic Working Papers at Centro de Estudios Andaluces E2002/13, Centro de Estudios Andaluces.
    • Handle: RePEc:cea:doctra:e2002_13
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    Cited by:

    1. Manuel Alejandro Cardenete Flores, 2009. "Federalismo fiscal a partir de un modelo de equilibrio general aplicado: Andalucía vs. España," Revista de Estudios Regionales, Universidades Públicas de Andalucía, vol. 4, pages 359-366.
    2. M. Carmen Lima & M. Alejandro Cardenete, 2005. "Impact Assessment of European Structural Funds in Andalusia - a CGE Approach," ERSA conference papers ersa05p154, European Regional Science Association.
    3. F J André & M A Cardenete & C Romero, 2008. "Using compromise programming for macroeconomic policy making in a general equilibrium framework: theory and application to the Spanish economy," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(7), pages 875-883, July.
    4. Campoy-Muñoz, Pilar & Cardenete Flores, Manuel Alejandro & Delgado, M. Carmen & Hewings, Geoffrey, 2016. "Effects of a reduction in employers' social security contributions: Evidence from Spain," Economics Discussion Papers 2016-32, Kiel Institute for the World Economy (IfW Kiel).
    5. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 379-475, Elsevier.
    6. Pouchkarev, Igor & Spronk, Jaap & Trinidad Segovia, Juan E., 2006. "Empirical Insights on the Heterogeneity of the Spanish Stock Market/Un Análisis Empírico De La Heterogeneidad Del Mercado De Capitales Español," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 24, pages 1091-1106, Diciembre.
    7. Esther Velázquez & M. Alejandro Cardenete & Geoffrey J.D. Hewings, 2000. "Water Price and Water Relocation in Andalusia. A Computable General Equilibrium Approach," Regional and Urban Modeling 283600101, EcoMod.
    8. Cardenete, Manuel Alejandro & Delgado, M. Carmen, 2015. "A simulation of impact of withdrawal European funds on Andalusian economy using a dynamic CGE model: 2014–20," Economic Modelling, Elsevier, vol. 45(C), pages 83-92.
    9. André, Francisco J. & Cardenete, M. Alejandro, 2009. "Defining efficient policies in a general equilibrium model: a multi-objective approach," Socio-Economic Planning Sciences, Elsevier, vol. 43(3), pages 192-200, September.
    10. Cámara Sánchez, Ángeles & Cardenete Flores, M.Alejandro & Monrobel Alcántara, José Ramón, 2014. "Matrices de Contabilidad Social y Modelos de Equilibrio General Aplicado elaborados en España a nivel regional/Social Accounting Matrices and Applied General Equilibrium Models Developed in Spain at R," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 32, pages 427-454, Enero.
    11. Francisco Andre & M. Alejandro Cardenete, 2009. "Designing Efficient Subsidy Policies in a Regional Economy: A Multicriteria Decision-Making (MCDM)-Computable General Equilibrium (CGE) Approach," Regional Studies, Taylor & Francis Journals, vol. 43(8), pages 1035-1046.
    12. M. Alejandro Cardenete & G.J.D. Hewings & E. Velázquez, 2005. "Precio del agua y relocalización del recurso en la economía andaluza. Una aproximación desde un modelo de equilibrio general aplicado," Economic Working Papers at Centro de Estudios Andaluces E2005/22, Centro de Estudios Andaluces.
    13. repec:rre:publsh:v:34:y:2004:i:1:p:37-56 is not listed on IDEAS
    14. Mª del Carmen Delgado Lopez & M. Alejandro Cardenete Flores & María del Carmen Lima Díaz, 2012. "Economic Impact on Andalusian Economy of European Funds using a Dynamic Computable General Equilibrium Model: 2014-2020," EcoMod2012 3818, EcoMod.
    15. Chisari, Omar Osvaldo & Mastronardi, Leonardo Javier & Romero, Carlos Adrián, 2012. "Local taxes in Buenos Aires City: A CGE approach," MPRA Paper 40029, University Library of Munich, Germany.
    16. Antonio Morales & Pablo Brañas Garza, 2003. "Computational Errors in Guessing Games1," Economic Working Papers at Centro de Estudios Andaluces E2003/11, Centro de Estudios Andaluces.
    17. Cardenete Flores, M.A & Llop Llop, M., 2005. "Modelos multisectoriales de equilibrio general aplicado en España: Una revisión/Multisectorial Applied General Equilibrium Models in Spain: a Review," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 23, pages 385-404, Agosto.
    18. Clemente Polo & Elisabeth Valle, 2008. "A General Equilibrium Assessment of the Impact of a Fall in Tourism Under Alternative Closure Rules: the Case of the Balearic Islands," International Regional Science Review, , vol. 31(1), pages 3-34, January.
    19. Leonardo Mastronardi & Carlos Adrián Romero & Omar Osvaldo Chisari, 2012. "Local taxes in Buenos Aires City: a general equilibrium effects," EcoMod2012 3879, EcoMod.
    20. J. Cansino & M. Cardenete & J. Gonzalez & M. P. Pablo-Romero, 2013. "Economic impacts of solar thermal electricity technology deployment on Andalusian productive activities: a CGE approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 25-47, February.
    21. P. Campoy-Muñoz & M. A. Cardenete & F. J. De Miguel-Vélez & J. Pérez-Mayo, 2022. "How does fiscal austerity impact on poverty and inequality? The Spanish case," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(3), pages 715-737, October.
    22. Manuel Alejandro Cardenete & María del Carmen Delgado, 2015. "Impact assessment of European funds in Andalusia 2007-2013. A CGE approach," Working Papers 2015-001, Universidad Loyola Andalucía, Department of Economics.
    23. Francisco J. André & M. Alejandro Cardenete Flores, 2006. "Designing Efficient Policies in a Regional Economy. A MCDM-CGE Approach," Economic Working Papers at Centro de Estudios Andaluces E2006/03, Centro de Estudios Andaluces.
    24. Mastronardi, Leonardo Javier, 2013. "Federalismo fiscal en Argentina: Un análisis de efectos spillover mediante un CGE regional [Fiscal Federalism in Argentina: An analysis of spillover effects using a regional CGE]," MPRA Paper 54376, University Library of Munich, Germany.
    25. Cansino, J.M. & Cardenete, M.A. & González-Limón, J.M. & Román, R., 2014. "The economic influence of photovoltaic technology on electricity generation: A CGE (computable general equilibrium) approach for the Andalusian case," Energy, Elsevier, vol. 73(C), pages 70-79.

    More about this item

    Keywords

    applied general equilibrium models; social accounting matrix; fiscal policy; regional economy.;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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