{
  "title": "Liberating Supply-Fiscal Policy and Technological innovation in a Multicountry Model",
  "publication": "IMF Working Papers, June 1, 1998",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/liberating-supply-fiscal-policy-and-technological-innovation-in-a-multicountry-model-2661",
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  "summary": "This paper examines how endogenizing technological progress in a multicountry macroeconometric model affects the analysis of fiscal policies.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Examines how endogenizing technological progress in a multicountry macroeconometric model affects the analysis of fiscal policies.\n- Uses an expanded version of the IMF’s multicountry model, MULTIMOD, with total factor productivity (TFP) endogenized as a function of domestic research and development (R&D) expenditures, R&D expenditures of trading partners, and trade.\n- Concludes that, 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."
    },
    {
      "heading": "Model specification and methodology",
      "content": "- Model: Expanded MULTIMOD (IMF’s multicountry model).\n- TFP specification: Endogenized as a function of\n  - domestic R&D expenditures,\n  - R&D expenditures of trading partners,\n  - trade.\n- Comparison: Endogenous-TFP version versus standard exogenous-TFP version to evaluate fiscal policy effects."
    },
    {
      "heading": "Key findings",
      "content": "- Fiscal policy effects:\n  - Fiscal policies have much larger effects in the model with endogenous TFP compared with the model with exogenous TFP.\n  - These effects are long-lived domestically.\n  - Spillovers: Fiscal policies produce larger effects on other countries when TFP is endogenized.\n- Mechanism:\n  - R&D expenditures (domestic and foreign) and trade amplify and propagate fiscal impacts through their influence on TFP."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Accounting for technological progress:\n  - Fiscal policy analysis should incorporate endogenous TFP to capture larger and more persistent effects.\n- International considerations:\n  - Policymakers should recognize cross-border transmission of fiscal policy via R&D and trade channels, implying coordination or awareness of spillovers.\n- R&D and trade as amplifiers:\n  - Policies that influence R&D expenditures or trade can have magnified effects on growth through TFP dynamics and thus on the effectiveness of fiscal policy."
    },
    {
      "heading": "Subjects and keywords highlighted in the paper",
      "content": "- Subjects: Expenditure, Fiscal policy, National accounts, Private consumption, Production, Public debt, Total factor productivity\n- Keywords: country TFP, Econometric Models, endogenizing TFP, exogenous TFP, Global, net present value, Private consumption, R&D, R&D expenditure, Technological Progress, Total factor productivity, total factor productivity equation, WP"
    },
    {
      "heading": "Publication metadata (from source)",
      "content": "- Pages: 26\n- Volume: 1998\n- Issue: 095\n- Series: Working Paper No. 1998/095\n- Stock No: WPIEA0951998\n- ISBN: 9781451851793\n- ISSN: 1018-5941\n- Authors: Douglas Laxton, Tamim Bayoumi, David T. Coe\n- Date: June 1, 1998\n\nSource: IMF Working Paper \"Liberating Supply-Fiscal Policy and Technological innovation in a Multicountry Model\" (Working Paper No. 1998/095).\n\n---\n\n Content in this bundle\n\n- Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model - WP/98/95\n  - Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model - WP/98/95 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model - WP/98/95 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/liberating-supply-fiscal-policy-and-technological-innovation-in-a-multicountry-model-2661"
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    "Authors: Douglas Laxton, Tamim Bayoumi, David T. Coe",
    "Published: June 1, 1998",
    "Series: IMF Working Papers",
    "Examines how endogenizing technological progress in a multicountry macroeconometric model affects the analysis of fiscal policies.",
    "Uses an expanded version of the IMF’s multicountry model, MULTIMOD, with total factor productivity (TFP) endogenized as a function of domestic research and development (R&D) expenditures, R&D expenditures of trading partners, and trade.",
    "Concludes that, 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.",
    "Model: Expanded MULTIMOD (IMF’s multicountry model).",
    "TFP specification: Endogenized as a function of",
    "Comparison: Endogenous-TFP version versus standard exogenous-TFP version to evaluate fiscal policy effects.",
    "Fiscal policy effects:",
    "Mechanism:",
    "Accounting for technological progress:",
    "International considerations:",
    "R&D and trade as amplifiers:",
    "Subjects: Expenditure, Fiscal policy, National accounts, Private consumption, Production, Public debt, Total factor productivity",
    "Keywords: country TFP, Econometric Models, endogenizing TFP, exogenous TFP, Global, net present value, Private consumption, R&D, R&D expenditure, Technological Progress, Total factor productivity, total factor productivity equation, WP",
    "Pages: 26",
    "Volume: 1998",
    "Issue: 095",
    "Series: Working Paper No. 1998/095",
    "Stock No: WPIEA0951998",
    "ISBN: 9781451851793",
    "ISSN: 1018-5941",
    "Authors: Douglas Laxton, Tamim Bayoumi, David T. Coe",
    "Date: June 1, 1998",
    "**Liberating Supply: Fiscal Policy and Technological Innovation in a Multicountry Model - WP/98/95**"
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