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Economic Effects Of Regional Tax Incentives: A General Equilibrium Approach

January 01, 2005
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Tax incentives are common instruments in regional policies used to attract new investments and promote increase in employment and income, but the impact on regional public finances is very controversial. This paper uses an interregional computable general equilibrium model for the Brazilian economy to evaluate the net effects of tax incentives on the regional government revenues. The model takes into account the structural relationships between two regions and the specific characteristics of the Brazilian federalism that affects regional public finances.

http://www.anpec.org.br/encontro2005/artigos/A05A124.pdf