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Macroeconomic Implications of Alternative Tax Regimes: The Case of Greece

  • Dimitris Papageorgiou

    ()

    (Athens University of Economics and Business)

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.

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File URL: http://www.bankofgreece.gr/BogEkdoseis/Paper200997.pdf
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Paper provided by Bank of Greece in its series Working Papers with number 97.

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Length: 48 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:bog:wpaper:97
Contact details of provider: Web page: http://www.bankofgreece.gr
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