Bucciol A., Cavalli L., Fedotenkov I., Pertile P., Polin V., Sartor N., Sommacal A. (2017).
A Large Scale OLG Model for the Analysis of the Redistributive Effects of Policy Reforms. European Journal Of Political Economy, vol 48 pp. 104 -127
The paper presents a large scale overlapping generation model with heterogeneous agents, where the household is the decision unit. We calibrate the model for three European countries – France, Italy and Sweden – which show marked differences in the design of some public programmes. We examine the properties in terms of annual and life cycle redistribution of a number of tax-benefit programmes, by studying the impact of removing from our model economies some or all of them. We find that whether one considers a life cycle or an annual horizon, and whether behavioural responses are accounted for or not, has a large impact on the results. The model may provide useful insights for policy makers on which kind of reforms are more likely to achieve specific equity objectives.