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Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity

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  • Kazuo Mino

Abstract

This paper constructs a tractable model of endogenous growth with financial frictions and fiÂ…rm heterogeneity. We introduce factor income tax, consumption tax as well as the government consumption into the base model and explore the growth effect of Â…fiscal policy. We show that from the qualitative perspective, the long-run effects of Â…fiscal actions in our model are similar to those obtained in the representative-agent models. However, the quantitative impacts of Â…fiscal policy on long-run growth in our setting can be substantially different from those established in the model where agents are homogeneous and there is no fiÂ…nancial friction.
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  • Kazuo Mino, 2016. "Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity," The Japanese Economic Review, Japanese Economic Association, vol. 67(1), pages 3-30, March.
    • Handle: RePEc:bla:jecrev:v:67:y:2016:i:1:p:3-30
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    File URL: http://hdl.handle.net/10.1111/jere.12087
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    2. Maebayashi, Noritaka, 2024. "Sustainability of public debt, investment subsidies, and endogenous growth with heterogeneous firms and financial frictions," MPRA Paper 120884, University Library of Munich, Germany.
    3. Cheng-wei Chang & Ching-chong Lai & Ting-wei Lai, 2020. "Fiscal stimulus in a simple macroeconomic model of monopolistic competition with firm heterogeneity," The Japanese Economic Review, Springer, vol. 71(3), pages 447-477, July.

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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