The macroeconomic effects of public spending in health and education and capital and progressive taxation of profits and wealth

A policy mix suggested by UNITE (2024) based on increasing public spending in health and education by increasing the wage rates of public sector workers by 23% and increasing employment amounting to a further 2.79%-point increase in public spending as a ratio to GDP, a 2%-point increase in public gross fixed capital formation, a 7.1%-point increase in the average effective tax rate on profit income, a progressive wealth tax on the top 1% increasing the average effective tax rate on wealth by %0.38%-point, and a New Deal for Workers increasing labour’s power, which is estimated to increase the wage rates in the private sector by 3.24% could lead to substantial improvements in income, employment and public finance. The estimated effects suggest that in response to this policy mix GDP increases by 22.44%, employment increases by 2.83%,private investment as a ratio to GDP increases by 6.50%, public debt/GDP decreases by 9.45%-point, thanks to a very strong increases in GDP, despite a high increase in public spending.