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Stimulating Long-Term Growth and Welfare in the U.S

Author

Listed:
  • James Malley
  • Apostolis Philippopoulos
  • Jim Malley
Abstract
We develop an endogenous growth model to quantify how permanent structural policy changes that enhance the fiscal policy mix, markets’ functioning, and public institutions’ quality affect long-term growth and welfare. The reforms include increased public investment, reduced market power through lower price markups for patents and intermediate goods, and an improved institutional framework that reduces rent-seeking. All reforms, except lower patent prices, lead to per-capita output and welfare gains along the transition and balanced growth paths. In contrast, a lower markup in the research sector hurts innovation, leading to lower growth over both paths and welfare losses along the transition.

Suggested Citation

  • James Malley & Apostolis Philippopoulos & Jim Malley, 2023. "Stimulating Long-Term Growth and Welfare in the U.S," CESifo Working Paper Series 10658, CESifo.
    • Handle: RePEc:ces:ceswps:_10658
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    endogenous growth; structural policy; welfare;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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