Unité mixte de recherche 7235

Dynamic Effects of a Fiscal Reform in a Two-Sector Small Open Economy Model

Annual Congress of the European Economic Association (EEA)

27-31 August


Romain Restout, Olivier Cardi

We investigate the dynamic and steady-state effects of a change in consumption and labor tax rates (« social VAT ») in a two-sector small open economy with capital accumulation and endogenous employment. With fixed labor, the substitution of payroll tax on wage for consumption tax leaving unchanged the government budget constraint induces solely a rise in wage rate together with a fall in the marginal utility of wealth, leaving unchanged steady-state levels of variables. Instead, by extending the two-sector model by Turnovsky and Sen (1995) to elastic labor, we find that the fiscal policy crowds-in consumption and investment expenditure both in the short-run and the long-run and raises employment. The analytical tractability of the model allows us to characterize the transitional paths and the factors governing the impact and long-term effects. Interestingly, while steady-state changes remain almost qualitatively independent of sectoral capital intensities, sectoral capital-labor ratios matter in determining the size of long-run variations. Numerical exercises show that: [i] beneficial effects on labor-market can be large (depending on initial tax wedge, sectoral capital-labor ratios and elasticity of labor supply), and [ii] balanced-budget fiscal multipliers derived from the change in tax structure fall in the range 0.2-0.4 approximately as the elasticity of labor supply falls in the range between 0.5-1.


lundi 11 décembre 2023

Law, Institutions and Economics in Nanterre (LIEN)

Bastien Michel (LEMNA, Nantes)

Measuring the Impact of Incarceration on Recidivism in Denmark

mercredi 13 décembre 2023

Économies du monde musulman

Chahir Zaki (LEO, Université d’Orléans)

Dette en Egypte : conjoncture défavorable ou structure vulnérable ?

jeudi 14 décembre 2023



Salle 101-102 à 12h

Opportunistic Political Central Bank Coverage: Does media coverage of ECB’s Monetary Policy Impacts German Political Parties’ Popularity?

jeudi 14 décembre 2023

Développement Durable Environnement et Energie (DDEE)

Emeline Bezin (CNRS/CREM)

Salle 101-102


jeudi 14 décembre 2023

Séminaire Econom’IA

Benjamin Ooghe-Tabanou (médialab - Sciences Po Paris)

Salle G614A de 11h à 12h30

Outils, méthodes et productions numériques à partir de données du web au médialab de Sciences Po

lundi 18 décembre 2023

Law, Institutions and Economics in Nanterre (LIEN)

Rémi Suchon (U Catholique de Lille)


jeudi 21 décembre 2023

Groupe de travail Economie Comportementale

Moustapha Sarr


jeudi 21 décembre 2023


Zoltán Szücs

L’économie du policing – le cas d’une police de tranquillité publique, la nouvelle police municipale de Paris

Inscription aux Newsletters