Reforma fiscal y bienestar: el caso de Chile

Abstract

[Abstract]: Welfare-maximizing fiscal structures are determined in a two-sector model of endogenous growth calibrated for the Chilean economy. Under the baseline, the current tax structure is found to be close to the optimal one. The result that the tax on physical capital income is near to the optimal one is robust under parameter variations. The sensitivity analysis, though, shows that the optimal taxes on wages and consumption depend strongly on the value of the intertemporal elasticity of substitution. An analysis of the optimal structure of government expenditure suggests that reducing the subsidy to education could result in a welfare gain.