Public redistributive policies in general equilibrium: An application to Greece

Angelos Angelopoulos, George Economides, George Liontos, Apostolis Philippopoulos and Stelios Sakkas

The Journal of Economic Asymmetries, 2022, vol. 26, issue C

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 off. 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.

Keywords: Inequality; Efficiency; Public policy (search for similar items in EconPapers)
JEL-codes: D3 H3 H5 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Working Paper: Public redistributive policies in general equilibrium: an application to Greece (2022)
Working Paper: Public Redistributive Policies in General Equilibrium: an application to Greece (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:26:y:2022:i:c:s1703494922000317

DOI: 10.1016/j.jeca.2022.e00271

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