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

Lourdes Alvarez and Braulio Escobar
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Lourdes Alvarez: Economic and Fiscal Policy Unit, United Nations Environment Programme
Braulio Escobar: Pontificia Universidad Católica del Perú

No 2025-015, Working Papers from Banco Central de Reserva 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.

Keywords: Dynamic Computable General Equilibrium Model; Tax Reform; Fiscal Policy; Peru; Municipal Compensation Fund (FONCOMUN); New Agrarian Law (search for similar items in EconPapers)
JEL-codes: C68 E62 H20 O23 (search for similar items in EconPapers)
Date: 2025-12
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