TAXATION AND ECONOMIC-GROWTH - SOME CALCULATIONS WITH A MACROECONOMICSEMIEQUILIBRIUM MODEL FOR THE DUTCH ECONOMY (MESEM)

This paper investigates the effects of taxation and government spendin g within a macroeconomic semi-equilibrium framework for the Netherland s. The model occupies a position in between general equilibrium models and empirical traditional macromodels: markets tend towards equilibri um in the long run, but do not,always clear in the short term. Balance d budget reductions in taxes on wages and profits exert favourable eff ects on employment and growth. The relative impact depends on the spec ific government outlays and taxes which are cut back. In the long run, tax revenue decreases less than the amount of the initial tax reducti on.