Seminario "Can VAT Cuts and Anti-Profiteering Measures Dampen the Effects of Food Price Inflation?"
Miércoles 7/5, 17.15h
Paper abstract
*Jointly written with Youssef Benzarti & Dario Tortarolo
Santiago Garriga
Ph. D. in Economics, Paris School of Economics. He is an Associate Professor of Economics at UNLP, Argentina. His main research interests are in public finance.
This paper estimates the effect of a temporary and large (21 p.p.) value-added tax (VAT) cut and anti-profiteering measures on food necessities during a period of high inflation in Argentina. Using barcode-level data across more than 3,000 supermarkets, we find that (1) absent the anti-profiteering measures, we find that prices responded more to the VAT increase than the VAT decrease and that this asymmetry is persistent; (2) imposing anti-profiteering measures led to lower increases in prices due to the VAT increase. Using a welfare model, we show that the VAT cut resulted in progressive welfare effects and that the anti-profiteering measures were successful at dampening the regressive welfare effects of the asymmetric pass-through. However, we find that these policies benefited high-income households more.
*Jointly written with Youssef Benzarti & Dario Tortarolo
Santiago Garriga
Ph. D. in Economics, Paris School of Economics. He is an Associate Professor of Economics at UNLP, Argentina. His main research interests are in public finance.