Onaran, Özlem ORCID: 0000-0002-6345-9922 (2024) The macroeconomic effects of public spending in health and education and capital and progressive taxation of profits and wealth. [Working Paper] (In Press)

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Abstract

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.

Item Type:	Working Paper
Uncontrolled Keywords:	public spending; taxation; macroeconomy
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HJ Public Finance
Faculty / School / Research Centre / Research Group:	Faculty of Business
Last Modified:	17 Jun 2024 01:38
URI:	http://gala.gre.ac.uk/id/eprint/47397

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