The Economic Impact of Cloud Computing on Business Creation, Employment and Output in Europe

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Cloud computing is a new general purpose Internet-based technology through which information is stored in servers and provided as a service and on-demand to clients. Adopting the endogenous market structures approach to macroeconomics, the paper analyzes the economic impact of its gradual introduction in the next years and one emphasizes its role in fostering business creation and competition thanks to the reduction of the fixed costs of entry in ICT capital. The calculations based on a DSGE model show a significative impact for the European Union with the creation of a few hundred thousands new SMEs. Governments could enhance these benefits by subsidizing the adoption of cloud computing solutions.