Firm and Technology Dynamics in the Short- and Long-Run: A Macroeconomic Model for Research and Innovation Policy Evaluation

Cristiana Benedetti Fasil (), Giammario Impullitti, Omar Licandro () and Petr Sedlacek
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Cristiana Benedetti Fasil: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en

No JRC120871, JRC Research Reports from Joint Research Centre

Abstract: We develop a dynamic stochastic general equilibrium model with firm and technology dynamics to assess the impact of a rich set of innovation policies. We explore the aggregate and cross-sectional effects of an R&D tax credit, corporate taxes, and policies affecting firms’ access to credit. Two main results emerge. First, the aggregate impact of these policies is driven by general equilibrium effects operating via the government budget, the labor market and via equilibrium entry of firms. In contrast, their stimulating effect on innovation and productivity growth has a negligible impact on aggregate income and employment. Second, we find that uniform policies have heterogeneous effects on firms and their size distribution which generate rich feedbacks to the aggregate economy.

Keywords: Firm dynamics; innovation policy; endogenous growth; business cycles (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-dge, nep-ent, nep-mac, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:ipt:iptwpa:jrc120871

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