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 28 novembre 2022

Law, Institutions and Economics in Nanterre (LIEN)

Marianne Lumeau (CREM, Université de Rennes I)

En salle 614 et en distanciel

American bias in a local music streaming market: curation push vs. preference pull

mardi 29 novembre 2022

Recherche et Economie et Socioéconomie Politique, des Institutions et des Régulations (RESPIR)

Adriano do Vale (Université de Poitiers) et Léo Malherbe (Université Université de Picardie Jules Verne)

Shedding light on a Blind Spot: New empirical evidence on the Accountability of the EuroSystem National Central Banks

mardi 29 novembre 2022

Series of Webinars on Economics of Environment, Energy and Transport (SWEEET)

Thomas Douenne (Univ. Amsterdam), Albert Jan Hummel (Univ. Amsterdam), Marcelo Pedroni (Univ. Amsterdam)

Optimal Fiscal Policy in a Climate-Economy Model with Heterogeneous Households

jeudi 1 décembre 2022


Nicolas de Roux

Capturing international influences in US monetary policy through a NLP approach

lundi 5 décembre 2022

Law, Institutions and Economics in Nanterre (LIEN)

Vincent Lefrère (Institut Mines Telecom)

En salle 614 et en distanciel

Privacy, Data and Competition: The Case of Apps For Young Children

mardi 6 décembre 2022

Recherche et Economie et Socioéconomie Politique, des Institutions et des Régulations (RESPIR)

Eric Monnet (EHESS et PSE)

Le rôle d’amortisseur des banques centrales – une perspective historique

jeudi 8 décembre 2022


Guillaume Pierné

12h - 13h, salle 110


lundi 12 décembre 2022

Law, Institutions and Economics in Nanterre (LIEN)

Clément Brébion (Copenhagen BS)

En salle 614 et en distanciel

Unemployment Insurance Eligibility and Employment Duration

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