Public redistributive policies in general equilibrium: an application to Greece

Angelopoulos, Angelos, Economides, George, Liontos, George, Philippopoulos, Apostolis and Sakkas, Stelios (2022) Public redistributive policies in general equilibrium: an application to Greece. GreeSE Papers: Hellenic Observatory Papers on Greece and Southeast Europe (177). London School of Economics and Political Science, London, UK.

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Abstract

We develop a general equilibrium OLG model of a small open economy to quantify the aggregate and distributional implications of a wide menu of public redistributive policies in a unified context. Inequality is driven by unequal parental conditions in financial and human capital. The model is calibrated and solved using fiscal data from Greece. Our aim is to search for public policies, targeted and non-targeted, that can reduce income inequality without damaging the macroeconomy and without worsening the public finances. Pareto-improving reforms that also reduce inequality include an increase in public education spending provided to all and an increase in the inheritance tax rate on financial wealth. At the other end, we identify reforms that may reduce inequality but make everybody worse o§. Regarding cases in between, a switch to a fully funded public pension system is good for everybody although it is the rich-born that benefit more by moving to a more efficient macroeconomy.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://www.lse.ac.uk/hellenic-observatory/publica...
Additional Information:	© 2022 The Authors
Divisions:	Hellenic Observatory
Subjects:	J Political Science > JN Political institutions (Europe) H Social Sciences > HC Economic History and Conditions H Social Sciences > HJ Public Finance
JEL classification:	D - Microeconomics > D3 - Distribution > D30 - General H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General
Date Deposited:	09 Dec 2022 11:18
Last Modified:	15 Sep 2023 23:57
URI:	http://eprints.lse.ac.uk/id/eprint/117574

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