IDEAS home Printed from https://ideas.repec.org/p/ekd/002672/3879.html
   My bibliography  Save this paper

Local taxes in Buenos Aires City: a general equilibrium effects

Author

Listed:
  • Leonardo Mastronardi
  • Carlos Adrián Romero
  • Omar Osvaldo Chisari

Abstract

In recent years, the computable general equilibrium (CGE) models for different regions have become an important area for research in economics. The aim of this paper is to analyze the fiscal policy and the effects of fiscal federalism to economic agents in a regional economy context. For this purpose we have built an interregional general equilibrium model for Argentina to conduct different simulations on changes in regional fiscal policy. We separate Argentina in two regions, Buenos Aires City (BAC) and the rest of the country. This is the first approach for the country and it is important to take political or economic decisions because allows to quantify direct and indirect regional effects. To construct an interregional computable general equilibrium model we must follow different steps. First, we need to make an interregional social accounting matrix (RSAM), which includes flows between households, regional sectors, government and external sector. Unfortunately, Buenos Aires does not have a Input Output Tables or a regional account system, so we have to construct the model with non survey and calibration techniques and other estimations. When we calibrate the RSAM, finding the equilibrium between supply and demand in each market, we are able to take the RSAM data and make a computable interregional general equilibrium model using MPSGE platform on GAMS program. The model contains 10 sectors of activity and two types of household (rich and poor) in each region. Moreover it includes a external sector (that commerce with each region), a local government for BAC that decides local fiscal policy in BAC region and a national government that decides national fiscal policy and local fiscal policy in the rest of the country. As we said before, we want to understand regional differences in terms of welfare and levels of activity in changes on fiscal policy. The idea is to measure the winners and losers when the central government changes your national policy into the region (in this case in Buenos Aires and in the rest of the country), and when local government changes your tax policy. Therefore we use the regional CGE model to capture these things. Into the paper we analyze the effects for economics agents of changes in important taxes of the country like regional sales tax or other regional taxes (decided by local governments) and national value added tax, national import tariffs or national factors taxes (decided by national government). Preliminary simulations allow us to provide some examples of the results. If hypothetically BAC local government increases regional taxes, then drops the welfare of households (in two regions) and fall the level of activity in either regions, falling the regional GDP in two regions. When we analyze the governments, BAC government welfare is increased while the national government welfare worsens. An increase in national value added tax generates in each region a drop (in different proportions) in the regional GDP and increasing the regional unemployment rate. The price level rises in each region. It produces a decline in the welfare of households. Moreover the national government increases it welfare but BAC government decline it. These results differs depending on the type of tax because it is different a property tax that a tax in production. Factor mobility is also a key determinant when looking the quantitative and qualitative results.

Suggested Citation

  • Leonardo Mastronardi & Carlos Adrián Romero & Omar Osvaldo Chisari, 2012. "Local taxes in Buenos Aires City: a general equilibrium effects," EcoMod2012 3879, EcoMod.
    • Handle: RePEc:ekd:002672:3879
    as

    Download full text from publisher

    File URL: http://ecomod.net/system/files/Local%20taxes%20in%20Buenos%20Aires_A%20CGE%20approach.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    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. Manuel Alejandro Cardenete & Ferran Sancho, 2006. "An Applied General Equilibrium Model to Assess the Impact of National Tax Changes on a Regional Economy," World Scientific Book Chapters, in: Masayuki Doi (ed.), Computable General Equilibrium Approaches In Urban And Regional Policy Studies, chapter 4, pages 41-55, World Scientific Publishing Co. Pte. Ltd..
    3. Sherman Robinson & Andrea Cattaneo & Moataz El-Said, 2001. "Updating and Estimating a Social Accounting Matrix Using Cross Entropy Methods," Economic Systems Research, Taylor & Francis Journals, vol. 13(1), pages 47-64.
    4. Bohringer, Christoph & Rutherford, Thomas F., 2008. "Combining bottom-up and top-down," Energy Economics, Elsevier, vol. 30(2), pages 574-596, March.
    5. A. T. Flegg & C. D. Webber, 1997. "On the Appropriate Use of Location Quotients in Generating Regional Input-Output Tables: Reply," Regional Studies, Taylor & Francis Journals, vol. 31(8), pages 795-805.
    6. J. Mark Horridge, 1991. "A General Equilibrium Model of Australia's Premier City," Centre of Policy Studies/IMPACT Centre Working Papers ip-74, Victoria University, Centre of Policy Studies/IMPACT Centre.
    7. Mastronardi, Leonardo Javier & Romero, Carlos Adrián, 2012. "Estimación de matrices de insumo producto regionales mediante métodos indirectos. Una aplicación para la ciudad de Buenos Aires [A non-survey estimation for regional input-output tables. An applica," MPRA Paper 37006, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. Chisari, Omar Osvaldo & Mastronardi, Leonardo Javier & Romero, Carlos Adrián, 2012. "Building an input-output Model for Buenos Aires City," MPRA Paper 40028, University Library of Munich, Germany.
    4. repec:rre:publsh:v:34:y:2004:i:1:p:37-56 is not listed on IDEAS
    5. Willenbockel, Dirk, 2017. "Macroeconomic Effects of a Low-Carbon Electricity Transition in Kenya and Ghana: An Exploratory Dynamic General Equilibrium Analysis," MPRA Paper 78070, University Library of Munich, Germany.
    6. Omar Chisari & Antonio Estache & Gaetan Nicodeme, 2016. "Efficiency and Equity Effects of Taxing the Financial Sector: Lessons from a CGE Model for Belgium," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 72(2), pages 125-157, June.
    7. Andrea BONFIGLIO, 2008. "Evaluating Implications of Agricultural Policies in a Rural Region through a CGE Analysis," Working Papers 328, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    8. 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.
    9. Gustavo FERRO & M. Priscila RAMOS & Carlos A. ROMERO, 2024. "Measuring Gross Employment Generation Possibilities In The Biogas Value Chain In Southern Brazil," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 21-37, June.
    10. Timilsina, Govinda R. & Chisari, Omar O. & Romero, Carlos A., 2013. "Economy-wide impacts of biofuels in Argentina," Energy Policy, Elsevier, vol. 55(C), pages 636-647.
    11. Mastronardi, Leonardo Javier & Romero, Carlos Adrián, 2012. "Estimación de matrices de insumo producto regionales mediante métodos indirectos. Una aplicación para la ciudad de Buenos Aires [A non-survey estimation for regional input-output tables. An applica," MPRA Paper 37006, University Library of Munich, Germany.
    12. P. Capros & Denise Van Regemorter & Leonidas Paroussos & P. Karkatsoulis & C. Fragkiadakis & S. Tsani & I. Charalampidis & Tamas Revesz, 2013. "GEM-E3 Model Documentation," JRC Research Reports JRC83177, Joint Research Centre.
    13. Anthony T. Flegg & Guiseppe R. Lamonica & Francesco M. Chelli & Maria C. Recchioni & Timo Tohmo, 2021. "A new approach to modelling the input–output structure of regional economies using non-survey methods," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-31, December.
    14. 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.
    15. Zheng LU & Xiang DENG, 2017. "Regional Specialization: New Methods Of Measurement And The Trends In China 1987-2007," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 17(2), pages 119-134.
    16. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.
    17. Marc Mueller & Emanuele Ferrari, 2012. "Social Accounting Matrices and Satellite Accounts for EU27 on NUTS2 Level (SAMNUTS2)," JRC Research Reports JRC73088, Joint Research Centre.
    18. Bjertnæs, Geir H. & Tsygankova, Marina & Martinsen, Thomas, 2013. "Norwegian climate policy reforms in the presence of an international quota market," Energy Economics, Elsevier, vol. 39(C), pages 147-158.
    19. Murphy, Frederic & Pierru, Axel & Smeers, Yves, 2019. "Measuring the effects of price controls using mixed complementarity models," European Journal of Operational Research, Elsevier, vol. 275(2), pages 666-676.
    20. Dai, Hancheng & Mischke, Peggy & Xie, Xuxuan & Xie, Yang & Masui, Toshihiko, 2016. "Closing the gap? Top-down versus bottom-up projections of China’s regional energy use and CO2 emissions," Applied Energy, Elsevier, vol. 162(C), pages 1355-1373.
    21. Kat, Bora, 2023. "Clean energy transition in the Turkish power sector: A techno-economic analysis with a high-resolution power expansion model," Utilities Policy, Elsevier, vol. 82(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ekd:002672:3879. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Theresa Leary (email available below). General contact details of provider: https://edirc.repec.org/data/ecomoea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.