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Title:Fiscal stimulus in a model with endogenous firm entry PDF Logo
Authors:Totzek, Alexander
Winkler, Roland C.
Issue Date:2010
Series/Report no.:Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2010,05
Abstract:This paper explores different fiscal stimuli within a business cycle model with an endogenous number of firms. We demonstrate that a changing number of firms is a crucial dimension for evaluating fiscal policy since it accelerates the impacts of fiscal policy. In the presence of demand stimuli fiscal multipliers are small and the number of firms may decline, in particular under distortionary tax financing. Policies that disburden private agents from income taxes, on the other hand, are effective in boosting economic activity and new firm creation.
Subjects:Fiscal Multipliers
Firm Entry
Product Variety
JEL:E62
E32
E22
Document Type:Working Paper
Appears in Collections:Economics Working Papers, Department of Economics, CAU Kiel

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