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Recent Tax Reforms in Peru: A Macro-Sectoral Assessment Using a Dynamic Computable General Equilibrium Model

Author

Listed:
  • Lourdes Alvarez

    (Economic and Fiscal Policy Unit, United Nations Environment Programme)

  • Braulio Escobar

    (Pontificia Universidad Católica del Perú)

Abstract

This study examines two recent tax reforms in Peru aimed at fostering economic growth. A Dynamic Computable General Equilibrium (DCGE) model calibrated with 2023 data is employed to evaluate their macroeconomic and sectoral impacts. The results show that the Municipal Compensation Fund Law generates limited aggregate effects, with some notable exceptions: it tends to reduce the value added of the construction sector while increasing public expenditure on goods and services. In contrast, the New Agrarian Law stimulates agricultural and agro-industrial production, enhancing exports and value added. However, it slightly reduces tax revenues and public spending and produces negative spillover effects on sectors not directly benefiting from the reform.

Suggested Citation

  • Lourdes Alvarez & Braulio Escobar, 2025. "Recent Tax Reforms in Peru: A Macro-Sectoral Assessment Using a Dynamic Computable General Equilibrium Model," Working Papers 2025-015, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2025-015
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    File URL: https://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2025/documento-de-trabajo-015-2025.pdf
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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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