Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model
26 Pages Posted: 15 Feb 2006
Date Written: June 1998
Abstract
This paper examines how endogenizing technological progress in a multicountry macroeconometric model affects the analysis of fiscal policies. It uses an expanded version of the IMF`s multicountry model, MULTIMOD, in which total factor productivity (TFP) is endogenized as a function of domestic research and development (R&D) expenditures, R&D expenditures of trading partners, and trade. Compared with the standard version of the model with exogenous TFP, fiscal policies have much larger and long-lived effects on the domestic economy and on other countries.
Keywords: Technological Progress, R&D, Econometric Models
JEL Classification: O31, 040
Suggested Citation: Suggested Citation
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