A comparison of structural reform scenarios across the EU member states : simulation-based analysis using the QUEST model with endogenous growth

This paper calibrates the Roeger-Varga-Veld (2008) micro-founded DSGE model with endogenous growth for all EU member states using country speci c structural characteristics and employs the individual country models to analyse the macroeconomic impact of various struc- tural reforms. We use the country models to analyse the costs and bene ts of reforms in terms of scal policy instruments such as taxes, bene ts, subsidies and administrative costs faced by rms. Our results con rm the bene cial e¤ects of various structural reforms, however the e¤ects show a large variation across the member states. We employ multiple-regression analysis to explore the most important factors driving the di¤erences within our simulation results. We nd that less R&D intensive countries would bene t the most from R&D promoting and skill- upgrading policies. We also nd that shifting from labour to consumption taxes, reducing the bene t replacement rate and relieving the administrative entry barriers are the most e¤ective measures in those countries which have high labour taxes and entry barriers.