We develop a dynamic stochastic general equilibrium model with firm and technology dynamics to assess the impact of a rich set of innovation policies. We explore the aggregate and cross-sectional effects of an R&D tax credit, corporate taxes, and policies affecting firms’ access to credit. Two main results emerge. First, the aggregate impact of these policies is driven by general equilibrium effects operating via the government budget, the labor market and via equilibrium entry of firms. In contrast, their stimulating effect on innovation and productivity growth has a negligible impact on aggregate income and employment. Second, we find that uniform policies have heterogeneous effects on firms and their size distribution which generate rich feedbacks to the aggregate economy.
BENEDETTI FASIL Cristiana;
IMPULLITTI Giammario;
LICANDRO Omar;
SEDLÁCEK Petr;
2020-06-03
Publications Office of the European Union
JRC120871
978-92-76-19284-8 (online),
1831-9424 (online),
EUR 30242 EN,
OP KJ-NA-30242-EN-N (online),
https://publications.jrc.ec.europa.eu/repository/handle/JRC120871,
10.2760/903763 (online),
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