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International endogenous growth, macro anomalies, and asset prices
In: Journal of economic dynamics & control, Band 78, S. 118-148
ISSN: 0165-1889
WITHDRAWN: International Endogenous Growth, Macro Anomalies, and Asset Prices
In: Journal of economic dynamics & control
ISSN: 0165-1889
International Endogenous Growth, Macro Anomalies, and Asset Prices
In: SAFE Working Paper No. 83, BoL Working Paper No. 29/2016
SSRN
Working paper
Innovation dynamics and fiscal policy: implications for growth, asset prices, and welfare
We study the general equilibrium implications of different fiscal policies on macroeconomic quantities, asset prices, and welfare by utilizing two endogenous growth models. The expanding variety model features only homogeneous innovations by entrants. The Schumpeterian growth model features heterogeneous innovations: "incremental" innovations by incumbents and "radical" innovations by entrants. The government levies taxes on labor income and corporate profits and supplies subsidies to consumption, capital investment, and investments in research and development by entrants and, if applicable, incumbents. With these models at hand, we provide new insights on the interplay of innovation dynamics and fiscal policy.
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Innovation dynamics and fiscal policy: Implications for growth, asset prices, and welfare
We study the general equilibrium implications of different fiscal policies on macroeconomic quantities, asset prices, and welfare by utilizing two endogenous growth models. The expanding variety model features only homogeneous innovations by entrants. The Schumpeterian growth model features heterogeneous innovations: "incremental" innovations by incumbents and "radical" innovations by entrants. The government levies taxes on labor income and corporate profits and supplies subsidies to consumption, capital investment, and investments in research and development by entrants and, if applicable, incumbents. With these models at hand, we provide new insights on the interplay of innovation dynamics and fiscal policy.
BASE
SSRN
Working paper
Labor market dynamics, endogenous growth, and asset prices
We extend the endogenous growth model of Kung and Schmid (2015) by adding endogenous labor dynamics and two variants of wage rigidities. This leads to an increase of 250-350 basis points in the risk premia, depending on the model specification. Additionally, it brings labor market quantities much closer to their empirical counterparts. In particular, wage rigidities generate an increase of around 60-250 basis points in labor growth volatility, which depends on how wage rigidities are modeled. (C) 2016 Elsevier B.V. All rights reserved.
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Understanding Macro and Asset Price Dynamics During the Climate Transition
In: Bank of Lithuania Discussion Paper No. 18/2019
SSRN
Technology Trade with Asymmetric Tax Regimes and Heterogeneous Labor Markets: Implications for Macro Quantities and Asset Prices
In: SAFE Working Paper No. 163
SSRN
Working paper
Global temperature, R&D expenditure, and growth
We shed new light on the macroeconomic and financial effects of rising temperatures. In the data, a shock to global temperature dampens research and development (R&D) expenditure growth. This novel empirical evidence is rationalized within a stochastic endogenous growth model. In the model, temperature shocks undermine economic growth via a drop in R&D expenditure. We examine three theoretical channels of the negative R&D expenditure effect of rising temperatures: the patent obsolescence channel, the labor productivity channel, and the capital quality channel. Temperature risk generates welfare costs of 93.14% of lifetime utility in this benchmark model. Moreover, the government can offset these welfare costs by subsidizing investment with 7.04% or R&D expenditure with 3.81% of total public spending, respectively. Alternatively, it can levy a lump-sum tax on households which finances 6.90% of total public spending, reduce corporate taxes by 3.62 percentage points, or increase labor taxes by 2.80 percentage points.
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Global temperature, R&D expenditure, and growth
We shed new light on the macroeconomic effects of rising temperatures. In the data, a shock to global temperature dampens expenditures in research and development (R&D). We rationalize this empirical evidence within a stochastic endogenous growth model, featuring temperature risk and growth sustained through innovations. In line with the novel evidence in the data, temperature shocks undermine economic growth via a drop in R&D. Moreover, in our endogenous growth setting temperature risk generates non-negligible welfare costs (i.e., 11% of lifetime utility). An active government, which is committed to a zero fiscal deficit policy, can offset the welfare costs of global temperature risk by subsidizing the aggregate capital investment with one-fifth of total public spending.
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Global Temperature, R&D Expenditure, and Growth
In: SAFE Working Paper No. 188
SSRN
Working paper
Global temperature, R&D expenditure, and growth
We shed new light on the macroeconomic effects of rising temperatures. In the data, a shock to global temperature dampens expenditures in research and development (R&D). We rationalize this empirical evidence within a stochastic endogenous growth model, featuring temperature risk and growth sustained through innovations. In line with the novel evidence in the data, temperature shocks undermine economic growth via a drop in R&D. Moreover, in our endogenous growth setting temperature risk generates non-negligible welfare costs (i.e., 11% of lifetime utility). An active government, which is committed to a zero fiscal deficit policy, can offset the welfare costs of global temperature risk by subsidizing the aggregate capital investment with one-fifth of total public spending.
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Austerity, fiscal uncertainty, and economic growth: Insights from fiscally weak EU countries
Recent empirical evidence suggests that during the last years fiscally weak European countries significantly cut their R&D budgets in an effort to reduce their deficit, according to the spirit of the Fiscal Compact. We propose a general equilibrium model that endogenously captures the trade-off between costs and benefits of austerity measures driven by a zero-deficit policy. Our analysis suggests that cuts in R&D spending undermine economic growth both in the short and the long run. We use our model to estimate the reduction of economic growth due to R&D cuts implemented by fiscally weak European countries during the period 2010-2012. The model predicts a reduction in real growth by 0:63%, 2:93%, and 4:46%, in the next 1, 5, and 10 years, respectively. Moreover, we show that the zero-deficit constraint hampers economic growth in the presence of either a productivity drop or a spending stimulus. ; [Date Written: August 8, 2014]
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