Macroeconomic effects resulting from the incentives of the Economic and Tax Regime in the Canary Islands between 1994 and 2013

The economy of the Canary Islands has experienced significant macroeconomic adjustment and real convergence with the European Union, being the tax and economic specificities established in its special Economic and Fiscal Regime (REF) one of the main driving forces. In this paper, we have quantitatively estimated effects of such specificities have had on variables such as the GVA, income per capita, employment rate and inflation rate of the Canary economy. To that end, we have adapted the macroeconometric model Hermin-Spain to the Canarian economy, allowing us the comparison of its evolution with and without the incentives of the REF.