Macroeconomic effects of growth-enhancing measures in the euro area

Alessandro Cantelmo, Alessandro Notarpietro and Massimiliano Pisani

No 1384, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We evaluate the short- and long-term effects of different growth-enhancing policy measures implemented in the euro area by simulating a calibrated New Keynesian model featuring endogenous growth via the private sector's R&D accumulation. We find that higher public investment in infrastructures, pro-competition reforms in the product market, and subsidies to R&D have a positive effect on long-term growth and raise the natural rate of interest. In the short term, these measures can have mildly negative effects on inflation through their positive effect on aggregate supply.

Keywords: endogenous growth; R&D spending; new keynesian model; monetary policy; euro area (search for similar items in EconPapers)
JEL-codes: E30 E52 O30 O42 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-cba, nep-dge, nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1384_22

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