Macroeconomic Effects of Simultaneous Implementation of Reforms

Abstract

This paper evaluates the macroeconomic effects of simultaneously implementing growth-friendly fiscal consolidation and competitionfriendly reforms in one European country by simulating a dynamic general equilibrium model. Our results are as follows. First, in the case of joint implementation, the increase in gross domestic product (GDP) is larger than the sum of GDP increases obtained from implementing reforms separately. Growth-friendly public debt consolidation uses lower interest payments in the long run to permanently reduce tax à The views expressed in this paper are those of the authors alone and should not be attributed to the Bank of Italy. We thank