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

PEP Working Paper 2010-13

54 Pages Posted: 1 Oct 2010 Last revised: 11 Jul 2018

See all articles by Martin Cicowiez

Martin Cicowiez

affiliation not provided to SSRN

Osvaldo Javier Alejo

affiliation not provided to SSRN

Luciano Di Gresia

affiliation not provided to SSRN

Sergio Olivieri

Universidad Nacional de La Plata

Ana Pacheco

affiliation not provided to SSRN

Date Written: September 28, 2010

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.

Keywords: poverty, export taxes, food prices, Argentina, computable general equilibrium microsimulations

JEL Classification: D58, F13, I30, O54

Suggested Citation

Cicowiez, Martin and Alejo, Osvaldo Javier and Di Gresia, Luciano and Olivieri, Sergio and Pacheco, Ana, Export Taxes, World Prices, and Poverty in Argentina: A Dynamic CGE-Microsimulation Analysis (September 28, 2010). PEP Working Paper 2010-13, Available at SSRN: https://ssrn.com/abstract=1684241 or http://dx.doi.org/10.2139/ssrn.1684241

Martin Cicowiez (Contact Author)

affiliation not provided to SSRN ( email )

Osvaldo Javier Alejo

affiliation not provided to SSRN ( email )

Luciano Di Gresia

affiliation not provided to SSRN ( email )

Sergio Olivieri

Universidad Nacional de La Plata ( email )

7 Nº 776
Buenos Aires, BA 1900
Argentina

Ana Pacheco

affiliation not provided to SSRN ( email )

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