Journal article

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The macroeconomics of TANSTAAFL

BP2-STS

  • 2013
Published in:
  • Journal of Macroeconomics. - Elsevier BV. - 2013, vol. 38, p. 76-85
English Market imperfections may lead to underinvestment in dynamic general equilibrium models. An interesting but unexplored question is whether policy interventions which attenuate underinvestment gaps necessarily imply that consumption will initially decline. By employing a calibrated version of a standard R&D-based growth model, we show that raising the R&D subsidy rate may not only close the R&D underinvestment gap but also raise consumption per capita at all times (“intertemporal free lunch”). We also discuss the general mechanics of such an intertemporal free lunch in both one-sector and multi-sector growth models and further examples.
Faculty
Faculté des sciences économiques et sociales et du management
Department
Département d'économie politique
Language
  • English
Classification
Economics
License
License undefined
Open access status
green
Identifiers
Persistent URL
https://folia.unifr.ch/unifr/documents/322926
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