Growth, wage inequality and welfare: complementarity between fiscaland monetary policies

Growth, wage inequality and welfare: complementarity between fiscaland monetary policies | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Growth, wage inequality and welfare: complementarity between fiscaland monetary policies Fernando J. Brustolin, Oscar Afonco, Paulo B. Vasconcelos This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7291614/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This theoretical paper presents a comprehensive analysis of the effects of monetary and fiscalpolicy on economic growth in the short, medium, and long term within the context of a knowledgebasedhorizontal R&D growth model. The model incorporates both skilled and unskilled labor. Thepropagation of policy effects into the model is facilitated by cash-in-advance constraints and R&Dsubsidies. Under certain conditions, both policies exert effects in the same direction on a range ofsignificant real macroeconomic variables in the long run. There is a notable complementarity inthe long-run effects on R&D intensity, skill premium, and the velocity of money. Complementarityon long-run welfare is possible if the policy effects on output dominate the effects on intermediategoods production costs and consumption. Economic conditions that favor such a complementarityinclude the labor market conditions of high Frisch elasticity of labor supply in conjunction with lowunemployment rates, a high rate of R&D discoveries, and an accelerated growth rate. Consideringthe transition dynamics when accounting for welfare tends to make policies more complementary,and such an effect is more pronounced at the beginning of the transition. JEL Classification: O40; O31; J31; E52; E41; E62 endogenous growth policy complementarity fiscal policy monetary policy skill premium welfare Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. 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