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Growth and Employment Effects of Fiscal Regimes

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  • Roeger, Werner
  • De Fiore, Fiorella

Abstract

This paper presents an endogenous growth model with firms exhibiting external or internal increasing returns. Firms are either perfectly or monopolistically competitive. The paper extends fiscal policy results to cases where innovations are intentionally generated by firms. To provide quantitative information, the model is calibrated to replicate EU7 aggregate data. The theoretical results indicate that distortionary taxes have strong negative effects on growth and employment and they tend to increase with the degree of private returns. However, the quantitative results turn out to be fairly robust with respect to alternative assumptions on the degree of internal increasing returns made in the process of calibrating the model. Copyright 1999 by Royal Economic Society.

Suggested Citation

  • Roeger, Werner & De Fiore, Fiorella, 1999. "Growth and Employment Effects of Fiscal Regimes," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 200-222, January.
    • Handle: RePEc:oup:oxecpp:v:51:y:1999:i:1:p:200-222
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    Cited by:

    1. Tine Dhont & Freddy Heylen, 2008. "Why Do Europeans Work (Much) Less? It Is Taxes And Government Spending," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 197-207, April.
    2. Echevarria, Cruz A., 2004. "Life expectancy, retirement and endogenous growth," Economic Modelling, Elsevier, vol. 21(1), pages 147-174, January.

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