Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model

26 Pages Posted: 15 Feb 2006

See all articles by Tamim Bayoumi

Tamim Bayoumi

International Monetary Fund (IMF); Centre for Economic Policy Research (CEPR)

David T. Coe

International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Douglas Laxton

International Monetary Fund (IMF) - Research Department

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

Bayoumi, Tamim and Coe, David T. and Laxton, Douglas, Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model (June 1998). IMF Working Paper, Vol. , pp. 1-26, 1998. Available at SSRN: https://ssrn.com/abstract=882610

Tamim Bayoumi (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6333 (Phone)
202-623-4795 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

David T. Coe

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Douglas Laxton

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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