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Liberating Supply-Fiscal Policy and Technological innovation in a Multicountry Model

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  • Mr. Douglas Laxton
  • Mr. Tamim Bayoumi
  • Mr. David T. Coe

Abstract

This paper examines how endogenizing technological progress in a multicountry macroeconometric model affects the analysis of fiscal policies. It uses an expanded version of the IMF’s multicountry model, MULTIMOD, in which total factor productivity (TFP) is endogenized as a function of domestic research and development (R&D) expenditures, R&D expenditures of trading partners, and trade. Compared with the standard version of the model with exogenous TFP, fiscal policies have much larger and long-lived effects on the domestic economy and on other countries.

Suggested Citation

  • Mr. Douglas Laxton & Mr. Tamim Bayoumi & Mr. David T. Coe, 1998. "Liberating Supply-Fiscal Policy and Technological innovation in a Multicountry Model," IMF Working Papers 1998/095, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1998/095
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    References listed on IDEAS

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    More about this item

    Keywords

    WP; net present value; Technological Progress; R&D; Econometric Models; endogenizing TFP; R&D expenditure; total factor productivity equation; country TFP; exogenous TFP; Total factor productivity; Private consumption; Global;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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