Public redistributive policies in general equilibrium: an application to Greece

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

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: inequality; efficiency; public policy (search for similar items in EconPapers)
JEL-codes: D30 H30 H50 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2022-11
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://eprints.lse.ac.uk/117574/ Open access version. (application/pdf)

Related works:
Journal Article: 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:ehl:lserod:117574

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