No. 1384 - Macroeconomic effects of growth-enhancing measures in the euro area

Vai alla versione italiana Site Search

by Alessandro Cantelmo, Alessandro Notarpietro and Massimiliano PisaniOctober 2022

This paper evaluates the short- and long-term macroeconomic effects of growth-enhancing measures in the euro area by simulating a New Keynesian model in which private investment in research and development (R&D) influences labour productivity. We consider an increase in public investment in infrastructure, reforms that foster competition in the goods market, and subsidies to private investment in R&D.

The measures examined in this paper increase the long-term growth rate of the economy by favouring labour productivity. This benefits private investment in physical capital, household consumption expenditure, and employment. In the short term, the expansion in aggregate supply can mildly reduce inflation.

Full text