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Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity

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  • Kazuo MIno

    (Kyoto University)

Abstract

This paper constructs a tractable model of endogenous growth with financial frictions and fiÂ…rm heterogeneity. We introduce factor income tax, consumption tax as well as the government consumption into the base model and explore the growth effect of Â…fiscal policy. We show that from the qualitative perspective, the long-run effects of Â…fiscal actions in our model are similar to those obtained in the representative-agent models. However, the quantitative impacts of Â…fiscal policy on long-run growth in our setting can be substantially different from those established in the model where agents are homogeneous and there is no fiÂ…nancial friction.

Suggested Citation

  • Kazuo MIno, 2015. "Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity," KIER Working Papers 930, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:930
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    Cited by:

    1. Cheng-wei Chang & Ching-chong Lai & Ting-wei Lai, 2020. "Fiscal stimulus in a simple macroeconomic model of monopolistic competition with firm heterogeneity," The Japanese Economic Review, Springer, vol. 71(3), pages 447-477, July.

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    More about this item

    Keywords

    fiscal policy; financial constraints; firm heterogeneity; endogenous growth;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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