eprintid: 49538 rev_number: 8 eprint_status: archive userid: 1482 importid: 105 dir: disk0/00/04/95/38 datestamp: 2024-07-12 12:18:35 lastmod: 2024-07-12 12:18:35 status_changed: 2024-07-12 12:18:35 type: monograph metadata_visibility: show creators_name: Cahn, Christophe creators_name: Fève, Patrick creators_name: Matheron, Julien creators_id: patrick.feve@tse-fr.eu creators_idrefppn: 083498265 creators_idrefppn: 080518311 creators_idrefppn: 077034929 creators_affiliation: Banque de France creators_affiliation: Paris School of Economics creators_halaffid: 1002422 title: The Long-Run Effects of Fiscal Rebalancing in a Heterogeneous-Agent Model ispublished: pub subjects: subjects_ECO abstract: This paper evaluates the long-run economic effects of a fiscal rebalancing reform, namely a policy consisting in increasing consumption taxes and simultaneously lowering payroll taxes, all this in a budget neutral way. To this end, we construct a heterogeneous-agent model and compare the pre- and post-reform steady states. The model is calibrated on French data to reproduce key characteristics of disposable income and net wealth distributions. We compare the outcomes of the reform under the benchmark model with those arising in its representative-agent version. Our results indicate that while the fiscal febalancing reform stimulates aggregate labor and capital, (i) it has a larger effect on capital in the heterogeneous-agent model than in its representative-agent counterpart; (ii) it also exacerbates wealth inequality, where wealthier households capture the whole macroeconomic increase in capital. The results are left unaffected by various perturbations around the baseline calibration. Taking into account the transition between the two stady states, a welfare analysis suggests that the reform entails a welfare cost even though a majority of agents would benefit from it. date: 2024-07 date_type: published publisher: TSE Working Paper official_url: http://tse-fr.eu/pub/129469 faculty: tse divisions: tse keywords: Fiscal Policy keywords: Fiscal rebalancing, Income & Wealth Distributions keywords: Heterogeneous Agent Model language: en has_fulltext: TRUE subjectsJEL: JEL_D31 subjectsJEL: JEL_E62 view_date_year: 2024 full_text_status: public monograph_type: working_paper series: TSE Working Paper volume: 24-1550 place_of_pub: Toulouse pages: 37 institution: Université Toulouse Capitole department: Toulouse School of Economics book_title: TSE Working Paper oai_identifier: oai:tse-fr.eu:129469 harvester_local_overwrite: department harvester_local_overwrite: pending harvester_local_overwrite: subjectsJEL harvester_local_overwrite: creators_idrefppn harvester_local_overwrite: creators_halaffid harvester_local_overwrite: place_of_pub harvester_local_overwrite: creators_id harvester_local_overwrite: creators_affiliation harvester_local_overwrite: institution harvester_local_overwrite: pages oai_lastmod: 2024-07-11T06:57:21Z oai_set: tse site: ut1 citation: Cahn, Christophe , Fève, Patrick and Matheron, Julien (2024) The Long-Run Effects of Fiscal Rebalancing in a Heterogeneous-Agent Model. TSE Working Paper, n. 24-1550, Toulouse document_url: https://publications.ut-capitole.fr/id/eprint/49538/1/wp_tse_1550.pdf