This paper numerically explores the distributive policy for improving both welfare and
income inequality with increased remittances in Ghana within a computable general equilibrium
(CGE) framework. Our simulation results show that the government can improve both welfare and
inequality by using a government surplus generated by increased remittances without any additional
revenue resources. If the government is concerned about inequality, then the surplus for more direct
transfers to the rural household results in the best outcome. On the other hand, if the government is
concerned only about welfare, then a policy to use the surplus for more government spending on
education or health achieves the largest welfare gain through its direct demand effect. While the
Ghanaian economy can enjoy the largest welfare gain as a whole when the surplus is used for more
government spending on education or health, the increased welfare gain will be more distributed to
the government sector in comparison with the case when the surplus is used for more direct
transfers to the rural household.