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Economic Effects Of Regional Tax Incentives: A General Equilibrium Approach

Author

Listed:
  • Alexandre Porsse
  • Eduardo Haddad
  • Eduardo Ribeiro

Abstract

Tax incentives are common instruments in regional policies used to attract new investments and promote increase in employment and income, but the impact on regional public finances is very controversial. This paper uses an interregional computable general equilibrium model for the Brazilian economy to evaluate the net effects of tax incentives on the regional government revenues. The model takes into account the structural relationships between two regions and the specific characteristics of the Brazilian federalism that affects regional public finances. The theoretical specification allows capturing indirect and induced effects of the new investments and the net output of such incentive policies for the regional government revenues.

Suggested Citation

  • Alexandre Porsse & Eduardo Haddad & Eduardo Ribeiro, 2005. "Economic Effects Of Regional Tax Incentives: A General Equilibrium Approach," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] 124, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
  • Handle: RePEc:anp:en2005:124
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    File URL: http://www.anpec.org.br/encontro2005/artigos/A05A124.pdf
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    References listed on IDEAS

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    2. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
    3. Dixon, Peter B. & Parmenter, B.R., 1996. "Computable general equilibrium modelling for policy analysis and forecasting," Handbook of Computational Economics,in: H. M. Amman & D. A. Kendrick & J. Rust (ed.), Handbook of Computational Economics, edition 1, volume 1, chapter 1, pages 3-85 Elsevier.
    4. de Melo, Jaime & Robinson, Sherman, 1989. "Product differentiation and foreign trade in CGE models of small economies," Policy Research Working Paper Series 144, The World Bank.
    5. Matthew W. Peter & Mark Horridge & G.A.Meagher & Fazana Naqvi & B.R.Parmenter, 1996. "The Theoretical Structure of MONASH-MRF," Centre of Policy Studies/IMPACT Centre Working Papers op-85, Victoria University, Centre of Policy Studies/IMPACT Centre.
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    8. Daphne A. Kenyon, 1997. "Theories of interjurisdictional competition," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 13-36.
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    11. Haddad, Eduardo A. & Domingues, Edson P. & Perobelli, Fernando S., 2002. "Regional effects of economic integration: the case of Brazil," Journal of Policy Modeling, Elsevier, vol. 24(5), pages 453-482, August.
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    Cited by:

    1. Olajide, Victor, 2015. "An examination of inter-regional spillover effects of macroeconomic policies in Nigeria," MPRA Paper 69242, University Library of Munich, Germany.
    2. Alexandre Porsse & Felipe Madruga, 2015. "Vertical versus Horizontal Tax Incentives Policies in Brazil: Assessing the Impacts Using a Computable General Equilibrium Model," ERSA conference papers ersa15p839, European Regional Science Association.

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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