Macroeconomic Implications of Alternative Tax Regimes: The Case of Greece

Dimitris Papageorgiou

No 97, Working Papers from Bank of Greece

Abstract: This paper uses a Dynamic General Equilibrium model that incorporates a detailed fiscal policy structure to examine how changes in the tax mix influence economic activity and welfare in the Greek economy. The results suggest that tax reforms that reduce the labour and capital income tax rates and increase the consumption tax rate lead to higher levels of output, consumption and private investment. If the goal of tax policy is to promote economic growth by changing the tax mix, then it should reduce the capital income tax rate and increase the consumption tax rate. In contrast, a lifetime welfare promoting policy would be to cut the labour income tax rate and increase the consumption tax rate.

Keywords: Fiscal Policy; Transitional dynamics; Economic growth; Welfare (search for similar items in EconPapers)
JEL-codes: E62 O52 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2009-05
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:bog:wpaper:97

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