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Export Taxes, World Prices, and Poverty in Argentina: a Dynamic CGE-Microsimulation Analysis

Author

Listed:
  • Martin Cicowiez
  • Javier Alejo
  • Luciano Di Gresia
  • Sergio Olivieri
  • Ana Pacheco

Abstract

In this paper we implement a sequential dynamic computable general equilibrium model combined with microsimulations to assess (1) the short- and long-run economic impacts of a gradual reduction in the export tax that was introduced during the economic crisis that hit Argentina at the end of 2001, and (2) the impact of a decrease in the world prices of food products, one of the country’s main export product. Our results show that the elimination of the export tax would have different long run effects depending on the fiscal instrument that is used by the government to compensate for the loss in tax revenue. On the one hand, when the government budget is equilibrated by an increased deficit, the average annual growth rate for 2008-2015 is lower than in the baseline scenario. On the other hand, when the government budget is equilibrated by an increased direct tax rate, there is a long-run positive effect on growth. In any case, the employment level is lower and the price of food items is higher. Therefore, the poverty headcount ratio increases. As expected, a reduction in the world price of food items (i.e., a worsening in Argentina’s terms of trade) would impact negatively on the country’s GDP growth rate and poverty, particularly in the rural areas.

Suggested Citation

  • Martin Cicowiez & Javier Alejo & Luciano Di Gresia & Sergio Olivieri & Ana Pacheco, 2010. "Export Taxes, World Prices, and Poverty in Argentina: a Dynamic CGE-Microsimulation Analysis," Working Papers MPIA 2010-13, PEP-MPIA.
  • Handle: RePEc:lvl:mpiacr:2010-13
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    References listed on IDEAS

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    1. Wang, Baotai & Klein, Erwin & Rao, U. L. Gouranga, 1995. "Inflation and stabilization in Argentina," Economic Modelling, Elsevier, vol. 12(4), pages 391-413, October.
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    Citations

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    Cited by:

    1. Leonardo Eric CALCAGNO, 2017. "Does the introduction of non-contributory social benefits discourage registered labour? Testing the impact of pension moratoriums on unregistered employment in Argentina (2003-2015)," LEO Working Papers / DR LEO 2526, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    2. Leonardo Eric Calcagno, 2017. "Does the introduction of non-contributory social benefits discourage registered labour? Testing the impact of pension moratoriums on unregistered employment in Argentina (2003-2015)," Working Papers hal-01611132, HAL.
    3. Javier Alejo, 2010. "Transición Demográfica y Pobreza en América Latina. Un Análisis de Microsimulaciones," CEDLAS, Working Papers 0108, CEDLAS, Universidad Nacional de La Plata.
    4. Necibi, Thameur, 2014. "The oil position in the Tunisian economy: Adaptation of computable general equilibrium model," MPRA Paper 55185, University Library of Munich, Germany.

    More about this item

    Keywords

    Poverty; export taxes; food prices; Argentina; computable general equilibrium microsimulations;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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