Macroeconomic Stabilization and Long-Term Growth: The Role of Policy Design

Abstract

Do fiscal stabilization policies affect the long-term growth of the economy? If so, are the long-term effects growth enhancing or growth reducing? When addressing these questions from a theoretical perspective, the literature has typically emphasized the importance of structural aspects such as the modeling approach of endogenous technological change while paying less attention to an elaborate design of the considered fiscal stabilization policies. This paper uses an agent-based macroeconomic model that generates endogenous business cycles to emphasize the role of the policy design for long-term growth effects of stabilization policies. By comparing a demand-oriented consumption policy and two different investment subsidizing policies, it can be shown that these policies are successful in smoothing the business cycle but differ in terms of their effects on economic long-term growth. This highlights the importance of policy design for the analysis of long-term effects of stabilization policies.

An impact of macroeconomic stabilization on the sustainable development of manufacturing enterprises: the case of Central and Eastern European Countries

“…Macroeconomic stability is conducive to making investments and consequently improving the competitive potential of the economy (Kekre 2016;Harting 2019).…”

Symmetric and Asymmetric Impact of Poverty, Income Inequality, and Population on Carbon Emission in Pakistan: New Evidence From ARDL and NARDL Co-Integration

“…The current study uses poverty and income inequality by incorporating population not just for the sensitive examination but also to evaluate its separate effect on CO 2 e. Past research studies suggest that high population growth causes economic uncertainty, thereby negatively affecting the economic growth and development (Rit, 2014;Berger and Grabert, 2018). This type of socio-economic uncertainty also affects CO 2 e emissions through a multiplier effect; therefore, on one hand, it discourages investment-saving behavior, research and development (R&D), and energy consumption as well (Sun, 2014;Harting, 2019), whereas, on the other hand, it motivates the vulnerable people to find and use the cheaper source of energy, for example, fossil fuel (Khan, 2019). Thus, in light of the above discussion, we hypothesized that population has a statistically significant impact and vital role in the emission of CO 2 e in the case of Pakistan.…”

The economics of transition pathways: A proposed taxonomy and a policy experiment

“…3 In previous studies, the baseline model had been used to study economic policies (e.g. Dawid and Gemkow, 2013;van der Hoog and Dawid, 2017;Dawid et al, 2018Dawid et al, , 2019aHarting, 2019). The model extension was used to study technology diffusion barriers and learning spillovers (Hötte, 2020(Hötte, , 2019d.…”