Can fiscal improve welfare in a small open economy?

Detalhes bibliográficos
Autor(a) principal: Costa, Luís F.
Data de Publicação: 1998
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10400.5/22724
Resumo: In the last decade the analysis of open economy macroeconomics shifted from a static framework to an intertemporal one. Simultaneously, macroeconomic models have increasingly incorporated imperfectly competitive structures in order to by-pass the limitations of the walrasian framework. Our model combines both features following the Obstfeld and Rogoff (1995) and Sutherland (1996) papers. However, instead of considering monopolistically competitive markets as in the Dixit and Stiglitz (1977) and Blanchard and Kiyotaki (1987) tradition, we assume size to be an important issue both at the industry and at the economy level as in d'Aspremont et al. (1989). Therefore, the mark-up is endogenous introducing an extra transmission mechanism for fiscal policy. Fiscal policy is shown to be effective on the aggregate output level, both in the short and the long runs. Allowing for entry intensifies the positive effect on aggregate output and lessens the negative effect on welfare. In fact, with entry it is possible to reach a new steady state which Pareto dominates the initial one.
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spelling Can fiscal improve welfare in a small open economy?Small Open EconomyCournot OligopolyFiscal PolicyIn the last decade the analysis of open economy macroeconomics shifted from a static framework to an intertemporal one. Simultaneously, macroeconomic models have increasingly incorporated imperfectly competitive structures in order to by-pass the limitations of the walrasian framework. Our model combines both features following the Obstfeld and Rogoff (1995) and Sutherland (1996) papers. However, instead of considering monopolistically competitive markets as in the Dixit and Stiglitz (1977) and Blanchard and Kiyotaki (1987) tradition, we assume size to be an important issue both at the industry and at the economy level as in d'Aspremont et al. (1989). Therefore, the mark-up is endogenous introducing an extra transmission mechanism for fiscal policy. Fiscal policy is shown to be effective on the aggregate output level, both in the short and the long runs. Allowing for entry intensifies the positive effect on aggregate output and lessens the negative effect on welfare. In fact, with entry it is possible to reach a new steady state which Pareto dominates the initial one.ISEG - Departamento de EconomiaRepositório da Universidade de LisboaCosta, Luís F.2021-12-14T16:54:33Z19981998-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/22724engCosta, Luis F.. 1998. "Can fiscal improve welfare in a small open economy?". Instituto Superior de Economia e Gestão - DE Working papers nº 8-1998/DEinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-03-06T14:52:16Zoai:www.repository.utl.pt:10400.5/22724Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T17:07:04.744517Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Can fiscal improve welfare in a small open economy?
title Can fiscal improve welfare in a small open economy?
spellingShingle Can fiscal improve welfare in a small open economy?
Costa, Luís F.
Small Open Economy
Cournot Oligopoly
Fiscal Policy
title_short Can fiscal improve welfare in a small open economy?
title_full Can fiscal improve welfare in a small open economy?
title_fullStr Can fiscal improve welfare in a small open economy?
title_full_unstemmed Can fiscal improve welfare in a small open economy?
title_sort Can fiscal improve welfare in a small open economy?
author Costa, Luís F.
author_facet Costa, Luís F.
author_role author
dc.contributor.none.fl_str_mv Repositório da Universidade de Lisboa
dc.contributor.author.fl_str_mv Costa, Luís F.
dc.subject.por.fl_str_mv Small Open Economy
Cournot Oligopoly
Fiscal Policy
topic Small Open Economy
Cournot Oligopoly
Fiscal Policy
description In the last decade the analysis of open economy macroeconomics shifted from a static framework to an intertemporal one. Simultaneously, macroeconomic models have increasingly incorporated imperfectly competitive structures in order to by-pass the limitations of the walrasian framework. Our model combines both features following the Obstfeld and Rogoff (1995) and Sutherland (1996) papers. However, instead of considering monopolistically competitive markets as in the Dixit and Stiglitz (1977) and Blanchard and Kiyotaki (1987) tradition, we assume size to be an important issue both at the industry and at the economy level as in d'Aspremont et al. (1989). Therefore, the mark-up is endogenous introducing an extra transmission mechanism for fiscal policy. Fiscal policy is shown to be effective on the aggregate output level, both in the short and the long runs. Allowing for entry intensifies the positive effect on aggregate output and lessens the negative effect on welfare. In fact, with entry it is possible to reach a new steady state which Pareto dominates the initial one.
publishDate 1998
dc.date.none.fl_str_mv 1998
1998-01-01T00:00:00Z
2021-12-14T16:54:33Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
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dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.5/22724
url http://hdl.handle.net/10400.5/22724
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Costa, Luis F.. 1998. "Can fiscal improve welfare in a small open economy?". Instituto Superior de Economia e Gestão - DE Working papers nº 8-1998/DE
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
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dc.publisher.none.fl_str_mv ISEG - Departamento de Economia
publisher.none.fl_str_mv ISEG - Departamento de Economia
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
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