TY  - UNPD
A1  - Curatola, Giuliano Antonio
A1  - Donadelli, Michael
A1  - Gioffré, Alessandro
A1  - Grüning, Patrick
T1  - Austerity, fiscal volatility, and economic growth
T2  - SAFE working paper series ; No. 56
N2  - This paper contributes to the ongoing debate on the relationship between austerity measures and economic growth. We propose a general equilibrium model where (i) agents have recursive preferences; (ii) economic growth is endogenously driven by investments in R&D; (iii) the government is committed to a zero-deficit policy and finances public expenditures by means of a combination of labor taxes and R&D taxes. We find that austerity measures that rely on reducing resources available to the R&D sector depress economic growth both in the short- and long-run. High debt EU members are currently implementing austerity measures based on higher taxes and/or lower investments in the R&D sector. This casts some doubts on the real ability of these countries to grow over the next years.
T3  - SAFE working paper - 56 
KW  - Austerity Measures
KW  - Fiscal Policy
KW  - Endogenous Growth
KW  - R&D
Y1  - 2014
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/34443
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-344435
UR  - http://ssrn.com/abstract=2458855
PB  - SAFE
CY  - Frankfurt am Main
ER  -