Abstract

CHAVEZ, Ricardo  and  GARCIA, Carlos J.. Reforma tributaria en fases. El trimestre econ [online]. 2016, vol.83, n.330, pp.275-310. ISSN 2448-718X.

The main focus in this study is to analyze, both qualitatively and quantitatively, the impact of a tax reform, i.e., an informed in advance progressive increase (in phases) of taxes as opposed to a reform at once. Our results indicate that a reform in phases should produce two effects: substitution effect that drives companies to bring forward investment and this should increase the GDP and inflation. The reaction of the central bank should be to raise the rate of interest. The other effect is negative and is a wealth effect that reduces the price of the shares and increases the exchange rate. Taking the example of Chile, which conducted a tax reform recently (2014). A 1% increase in taxes should produce, due to the intertemporal distortion, an increase of 0.17% in GDP in the first year of the announcement. However, there may be other elements of diverse nature that may negatively influence the implementation of reform and thus completely cancel the effect of intertemporal substitution. Among these negatives example are the lack the of clarity in the reform by the government, the pessimism in the discussions from opposing views in Congress and its influence on the expectations of employers, lack of credibility, the uncertainty of new tax hikes, etc.

Keywords : business cycle; fiscal policy; bayesian econometrics; DSGE models.