A numerical approach to fiscal policy, unemployment, and growth in Europe
AbstractWe calibrate an infinite-horizon model with endogenous growth and unemployment on actual data from the largest countries in the European Union. Two types of balanced-budget fiscal policy experiments are studied. First, the effects of separately changing the tax rates on capital, labor and subsidies, as well as the replacement rates, are analyzed, assuming offsetting changes in lump-sum transfers. Second, we rule out offsetting transfers and study how effective is the cut in labor taxes when financed either raising capital taxation or reducing unemployment subsidies. We find two main results: (i) with lump-sum transfers, reducing labor taxes and unemployment subsidies is beneficial to both employment and growth, while cutting capital taxes is less beneficial; (ii) without transfers, cutting labor taxes is more effective when financed by a (modest) cut in unemployment subsidies rather than by a (sizable) increase in capital taxes. Sensitivity analysis shows that our results are robust to changes in a vast range of parameter values.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0004010.
Length: 45 pages
Date of creation: 31 May 2000
Date of revision:
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on A4; pages: 45; figures: included. Zip file containing separated pdf files for body, tables, and figures
Contact details of provider:
Web page: http://18.104.22.168
Fiscal Policy; Taxation; Europe; Unemployment; Growth; Numerical Simulation; Trade Union;
Other versions of this item:
- Francesco Daveri & Marco Maffezzoli, . "A numerical approach to fiscal policy, unemployment and growth in Europe," Working Papers 155, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-02-14 (All new papers)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Konstantinos Angelopoulos & James R. Malley & Wei Jiang, 2011.
"The distributional consequences of tax reforms under market distortions,"
2011_21, Business School - Economics, University of Glasgow.
- Konstantinos Angelopoulos & Wei Jiang & Jim Malley, 2011. "The Distributional Consequences of Tax Reforms under Market Distortions," CESifo Working Paper Series 3600, CESifo Group Munich.
- Angelopoulos, Konstantinos & Jiang, Wei & Malley, James, 2011. "The distributional consequences of tax reforms under market distortions," SIRE Discussion Papers 2011-73, Scottish Institute for Research in Economics (SIRE).
- Marco Maffezzoli, 2000.
"Non-Walrasian Labor Markets and Real Business Cycles,"
- Marco Maffezzoli, 2001. "Non-Walrasian Labor Markets and Real Business Cycles," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(4), pages 860-892, October.
- Marco Maffezzoli, . "Non-Walrasian Labor Markets and Real Business Cycles," Working Papers 167, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Zanetti, Francesco, 2011.
"Labor market institutions and aggregate fluctuations in a search and matching model,"
European Economic Review,
Elsevier, vol. 55(5), pages 644-658, June.
- Francesco Zanetti, 2006. "Labor Market Institutions and Aggregate Fluctuations in a Search and Matching Model," Computing in Economics and Finance 2006 445, Society for Computational Economics.
- Francesco Zanetti, 2007. "Labour market institutions and aggregate fluctuations in a search and matching model," Bank of England working papers 333, Bank of England.
- Dimitris Papageorgiou, 2009. "Macroeconomic Implications of Alternative Tax Regimes: The Case of Greece," Working Papers 97, Bank of Greece.
- Kennan,J., 2001.
"Uniqueness of positive fixed points for increasing concave functions on Rn : an elementary result,"
2, Wisconsin Madison - Social Systems.
- John Kennan, 2001. "Uniqueness of Positive Fixed Points for Increasing Concave Functions on Rn: An Elementary Result," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(4), pages 893-899, October.
- Xavier Raurich & Hector Sala & Valeri Sorolla, . "Employment and public capital in Spain," Working Papers 2001-21, FEDEA.
- Xavier Raurich & Valeri Sorolla, 2011.
"Growth, Unemployment and Wage Inertia,"
UFAE and IAE Working Papers
879.11, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Ardagna, Silvia, 2007. "Fiscal policy in unionized labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 31(5), pages 1498-1534, May.
- Xavier Raurich & Hector Sala & Valeri Sorolla, 2002. "Employment and Public Capital in Spain," Working Papers wp0204-1, Department of Applied Economics at Universitat Autonoma of Barcelona.
- Francesco Zanetti, 2003. "Non-Walrasian Labor Market and the European Business Cycle," Boston College Working Papers in Economics 574, Boston College Department of Economics, revised 20 May 2004.
- Ardagna, Silvia, 2007. "Fiscal Policy in Unionized Labor Markets," Scholarly Articles 2580048, Harvard University Department of Economics.
- Xavier Raurich & Valeri Sorolla, 2008. "A General Framework for Growth Models with Non-Competitive Labor and Product Markets and Disequilibrium Unemployment," Working Papers 369, Barcelona Graduate School of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.