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Local taxes in Buenos Aires City: A CGE approach


  • Chisari, Omar Osvaldo
  • Mastronardi, Leonardo Javier
  • Romero, Carlos Adrián


The aim of this paper is to analyze the spillover effects of national and local tax policies using a static bi-regional general equilibrium model for the Buenos Aires City (BAC) and the rest of Argentina. The BAC represents 7% of the population of the country, but 29% of its GDP. We analyze the reciprocal impact of fiscal policies on welfare of private agents and the spillover effects on the performance of the public sector of both regions. As expected, the model shows that national fiscal policies do have relevant effects on the activity level of the city and on the welfare of its inhabitants. However, more unexpectedly, it also shows that fiscal decisions at the level of the city have a significant impact on the rest of the country. The results show that: (i) an increase in BAC local taxes produce a decline in the welfare of households and in the activity levels, in both regions; (ii) an increase in national value added tax decreases the regional GDP in both regions, but in different proportions, and increases the regional unemployment rate. The results differ depending on the type of tax (sales or property). Production elasticities and the rule of indexation of wages are key factors that affect the quantitative and qualitative results.

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  • 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.
  • Handle: RePEc:pra:mprapa:40029

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    References listed on IDEAS

    1. Manuel Alejandro Cardenete Flores, 2006. "Federalismo fiscal a partir de un modelo de equilibrio general aplicado: Andalucía VS. España," Economic Working Papers at Centro de Estudios Andaluces E2006/22, Centro de Estudios Andaluces.
    2. repec:wsi:wschap:9789812707116_0004 is not listed on IDEAS
    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. Chisari, Omar & Ferro, Gustavo & González, Mariano & León, Sonia & Maquieryra, Javier & Mastronardi, Leonardo & Roitman, Mauricio & Romero, Carlos & Theller, Ricardo, 2010. "Modelo de Equilibrio General Computado para la Argentina 2006," UADE Textos de Discusión 63_2010, Instituto de Economía, Universidad Argentina de la Empresa.
    5. Robinson, Sherman & Cattaneo, Andrea & El-Said, Moataz, 1998. "Estimating a social accounting matrix using cross entropy methods:," TMD discussion papers 33, International Food Policy Research Institute (IFPRI).
    6. 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.
    7. Diao, Xinshen & Diaz-Bonilla, Eugenio & Robinson, Sherman & Orden, David, 2005. "Tell me where it hurts, an' I'll tell you who to call," MTID discussion papers 84, International Food Policy Research Institute (IFPRI).
    8. 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: Computable General Equilibrium Approaches In Urban And Regional Policy Studies, chapter 4, pages 41-55 World Scientific Publishing Co. Pte. Ltd..
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    More about this item


    Fiscal Federalism; Computable general equilibrium; Regional spillover effects;

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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