However, given that the broader reform involves a shift in the composition from corporate income tax towards consumption tax, it also reduces the price of domestically-produced goods relative to imported goods (the so-called fiscal devaluation effect), possibly boosting thereby net exports and the current account in the short run.26 Considering that the competitiveness effect may partly eroded by nominal exchange rate adjustments, the effect could be stronger for euro area countries. By favouring new firms’ entry, price reductions and higher demand, a more competitive environment can stimulate investment, in particular if this is accompanied by a lower regulatory burden (Alesina et al., At the same time, by reducing internally-generated funds, lower mark-ups may depress investment, at least in the short term.