Simulating the Effect of Business Tax Abolition through a New Regional CGE Model: Evidence from Italy

Alessio Baldassarre, Valerio Ferdinando Calà, Danilo Carullo, Hasan Dudu, Elisa Marie Fusco, Pasquale Giacobbe and Carlo Orecchia

No 10387, Policy Research Working Paper Series from The World Bank

Abstract: The main goal of regional computable general equilibrium models is to analyze how different regions within a specific area react to certain shocks. Therefore, countries with high heterogeneity among regions, like Italy, constitute an interesting case study for regional computable general equilibrium model analysis. This paper presents the regional part of the new (recursive) dynamic single-country computable general equilibrium model called the Italian Regional and Environmental Computable General Equilibrium of the Department of Finance, based on the Mitigation, Adaptation and New Technologies Applied General Equilibrium model of the World Bank. A new regional social accounting matrix for Italy (20 regions at the Nomenclature of territorial units for statistics level) has been constructed. The social accounting matrix is used as input data to simulate the abolition of the regional tax on productive activities (regional business tax) through three different scenarios, focusing on the effects on gross domestic product, regional value added, and welfare. The results show that under the modeling assumptions, the complete abolition of the regional tax on productive activities would positively impact Italian economic growth and regional welfare.

Date: 2023-03-29
New Economics Papers: this item is included in nep-eur and nep-pbe
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://documents.worldbank.org/curated/en/09925620 ... 75f0c8c25d7dca6a.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:10387

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().