Bank of Greece publishes Economic Bulletin Issue 62 with research on fiscal drag, bank profit tax effects and travel-related services inflation

The Bank of Greece published Economic Bulletin Issue 62 (December 2025), presenting three research articles and noting that the views expressed are those of the authors. The issue also includes abstracts of Working Papers released by the Special Studies Division of the Economic Analysis and Research Directorate between July and December 2025. On personal income tax, a microsimulation-based study finds tax-to-base elasticity in Greece is relatively modest and broadly in line with the euro area average, implying scope for fiscal drag, but estimates for 2019–23 show tax policy reforms more than offset potential fiscal-drag effects, keeping personal income tax revenues broadly stable as a share of GDP while slightly reducing the average effective tax rate and improving progressivity and redistributive capacity. A Dynamic Stochastic General Equilibrium analysis of a temporary tax on banks’ profits indicates negative macroeconomic effects via bank capital and funding channels that constrain credit supply and reduce collateral values, with revenue redistribution to households providing only partial mitigation, though the immediate impact could be limited given high capital adequacy and liquidity in Greek credit institutions. A third article examines how travel-related services prices, including package holidays, restaurants and hotels, and passenger air transport, shape Greece’s Harmonised Index of Consumer Prices, comparing HICP and CPI treatment, decomposing contributions using monthly data, and tracing seasonal patterns, structural changes and COVID-19 effects alongside a euro area cross-country comparison.