Evaluating Tax Reforms in Chile with a CGE Model

  • Cristián Mardones Departamento de Ingeniería Industrial, Universidad de Concepción


This paper makes a quantitative assessment of possible reforms to the Chilean tax system. The simulations are based on a recursive dynamic computable general equilibrium model that is calibrated with the input-output matrix 2003. For each scenario is considered a cut effective rate of value added tax and an increase in the richest quintile’s effective rate of income tax by 20% or 40% respectively. The results of the model are transferred to micro data to analyze the effects disaggregated. Finally, I conclude that cutting the VAT and raising income tax only would generate bounded improvements in poverty and income distribution
Keywords Tax reform, Income inequality, CGE, Microsimulation
How to Cite
Mardones, C. (2016). Evaluating Tax Reforms in Chile with a CGE Model. Estudios de Economía, 37(2), 243-284. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40036/43353