The paper develops a unified general equilibrium model including savings with overlapping generations, investment and … search unemployment. Long-run analytical results for the small open economy identify capital accumulation as a prime … transmission channel. The effects of integration on unemployment, however, depend importantly on the nature of wage taxation and …

for Germany indicate that this transition policy induces strong investment driven growth and yields a 7% gain in GDP per … capita and a reduction in the unemployment rate by 1.5 percentage points in the long-run. …

Credit constraints are more frequent among growth companies with large investment opportunities. For the same reason … investment opportunities to a larger extent. (ii) Taxes which are neutral in a neoclassical world, still restrict expansion … investment of constrained firms by reducing free cash-flow and thereby discourage innovation. (iii) A revenue neutral increase in …

demonstrates the neutrality properties of the reform with respect to investment, firm financial decisions and organizational choice …. Tax rates are chosen to prevent income shifting from labor to capital income. The reform decisively strengthens investment …