' First Experiment: An increase in the target real wage rate (An autonomous increase in wage inflation)

' Before running this program, run first REEs_mod so as to create a workfile and a baseline solution

' This program generates Graph s EXP-1.A to EXP-1.L discussed in the Appendix
smpl @all

' Store original value of shocked parameter to baseline
genr omega0_0 = omega0

' Increase the target wage rate
smpl 1960 @last
omega0 = -0.185
smpl @all

' Select the first alternative Scenario 1

REEs_mod.scenario(n, a="_1") "Scenario 1st"

' Set simulation sample
smpl 1947 @last

' Solve the model for the current sample

REEs_mod.solve(i=p)

' Store shocked value to scenario
genr omega0_1 = omega0

' and get back shocked variable to its baseline value
omega0 = omega0_0

' Creates charts from simulated variables

' Creates the chart in Graph EXP-1.A
smpl 1955 2050
graph exp1a.line ((w_1-w_0)/w_0)*100 (((w_1/pd_1)-(w_0/pd_0))/(w_0/pd_0))*100 ((pd_1-pd_0)/pd_0)*100
exp1a.options linepat
exp1a.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1a.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1a.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp1a.name(1) Effect upon nominal wages
exp1a.name(2) Effect upon real wages
exp1a.name(3) Effect upon prices
exp1a.addtext(t,just(c),just(c)) Graph III.4.11: Effect upon real wage rate, following an autonomous increase in wage inflation

show exp1a

' Creates the chart in Graph EXP-1.B
smpl 1955 2050
graph exp1b.line (i_k_1/i_k_0-1)*100 (y_k_1/y_k_0-1)*100 (c_k_1/c_k_0-1)*100
exp1b.options linepat
exp1b.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1b.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1b.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp1b.name(1) Real fixed investment
exp1b.name(2) Real output
exp1b.name(3) Real consumption
exp1b.addtext(t,just(c),just(c)) Graph 1.B: Evolution of consumption, investment and output, following an autonomous increase in wage inflation

show exp1b

' Creates the chart in Graph EXP-1.C
smpl 1955 2050
graph exp1c.line (x_k_1/x_k_0-1)*100 (y_k_1/y_k_0-1)*100 (m_k_1/m_k_0-1)*100
exp1c.options linepat
exp1c.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1c.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1c.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp1c.name(1) Real exports
exp1c.name(2) Real output
exp1c.name(3) Real imports
exp1c.addtext(t,just(c),just(c)) Graph 1.C: Evolution of exports, imports and output, following an autonomous increase in wage inflation

show exp1c

' Creates the chart in Graph EXP-1.D
smpl 1955 2050
graph exp1d.line ((psbr_1/y_1)-(psbr_0/y_0))*100 ((ca_row_1/y_1)-(ca_row_0/y_0))*100
exp1d.options linepat
exp1d.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1d.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1d.name(1) PSBR (Government surplus)
exp1d.name(2) Current Account
exp1d.addtext(t,just(c),just(c)) Graph III.4.15: Evolution of government and current account to GDP ratios,following an autonomous increase in wage inflation

show exp1d

' Creates the chart in Graph EXP-1.E
smpl 1955 2050
graph exp1e.line nirr_1-nirr_0
exp1e.options linepat
exp1e.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp1e.name(1) Effect upon net international reserve ratio
exp1e.addtext(t,just(c),just(c)) Graph 1.E: Change in net international reserves ratio, following an autonomous increase in wage inflation

show exp1e

' Creates the chart in Graph EXP-1.F
smpl 1955 2050
graph exp1f.line 101 (er_1-er_0+1)*100 99
exp1f.options linepat
exp1f.setelem(1) lcolor(black) lwidth(2) lpat(2)
exp1f.setelem(2) lcolor(green) lwidth(2) lpat(1)
exp1f.setelem(3) lcolor(black) lwidth(2) lpat(2)
exp1f.name(1) Inflationary pressure threshold
exp1f.name(2) Employment rate
exp1f.name(3) Deflationary pressure threshold
exp1f.addtext(t,just(c),just(c)) Graph III.4.14: Evolution of employment rate, following an autonomous increase in wage inflation

show exp1f

' Creates the chart in Graph EXP-1.G
smpl 1955 2050
graph exp1g.line (td_1/y_1-td_0/y_0)*100 (bcbs_1/y_1-bcbs_0/y_0)*100 (gdh_g_1/y_1-gdh_g_0/y_0)*100
exp1g.options linepat
exp1g.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1g.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1g.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp1g.name(1) Total Government debt
exp1g.name(2) Central Bank bills
exp1g.name(3) Government deposits at Central Bank
exp1g.addtext(t,just(c),just(c)) Graph III.4.16: Evolution of government debt, central bank bills, and government deposits at CB, following an autonomous increase in wage inflation

show exp1g

' Creates the chart in Graph EXP-1.H
smpl 1955 2050
graph exp1h.line ((c_k_1-c_k_0)/y_k_0)*100 ((i_k_1-i_k_0)/y_k_0)*100 ((g_k_1-g_k_0)/y_k_0)*100 ((x_k_1-x_k_0)/y_k_0)*100 -((m_k_1-m_k_0)/y_k_0)*100 ((y_k_1-y_k_0)/y_k_0)*100
exp1h.options linepat
exp1h.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1h.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1h.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp1h.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp1h.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp1h.setelem(6) lcolor(orange) lwidth(2) lpat(6)
exp1h.name(1) Real consumption
exp1h.name(2) Real investment
exp1h.name(3) Real government expenditure
exp1h.name(4) Real exports
exp1h.name(5) Real imports
exp1h.name(6) Real GDP
exp1h.addtext(t,just(c),just(c)) Graph III.4.13: Contribution to real GDP growth of an autonomous increase in wage inflation

show exp1h

' Creates the chart in Graph EXP-1.I
smpl 1955 2050
graph exp1i.line (((w_1/pr_1)-(w_0/pr_0))/(w_0/pr_0))*100 ((pd_1-pd_0)/pd_0)*100
exp1i.options linepat
exp1i.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1i.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1i.name(1) Effect upon wage to productivity ratio
exp1i.name(2) Effect upon prices
exp1i.addtext(t,just(c),just(c)) Graph III.4.12: Inflationary effect, following an autonomous increase in wage inflation

show exp1i

' Creates the chart in Graph EXP-1.J
smpl 1955 2050
graph exp1j.line (xrendog_1/xrendog_0-1)*100
exp1j.options linepat
exp1j.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp1j.name(1) Effect upon shadow exchange rate
exp1j.addtext(t,just(c),just(c)) Graph 1.J: Hypothetical effect upon shadow exchange rate (exchange rate that would prevail if market-determined), following an autonomous increase in wage inflation

show exp1j

' Creates the chart in Graph EXP-1.K
smpl 1955 2050
graph exp1k.line ((ydr_h_k_e_1-ydr_h_k_e_0)/ydr_h_k_e_0)*100 ((v_h_k_1-v_h_k_0)/v_h_k_0)*100
exp1k.options linepat
exp1k.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp1k.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp1k.name(1) Real effect upon regular disposable income
exp1k.name(2) Real effect upon households’ wealth
exp1k.addtext(t,just(c),just(c)) Graph 1.K: Real (income and wealth) effects upon consumption, following an autonomous increase in wage inflation

show exp1k

' Creates the chart in Graph EXP-1.L
smpl 1955 2050
graph exp1l.line (((cg_h_1/pd_1)-(cg_h_0/pd_0))/(cg_h_0/pd_0))*100
exp1l.options linepat
exp1l.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp1l.name(1) Real effect upon capital gains of households
exp1l.addtext(t,just(c),just(c)) Graph 1.L: Real effect upon capital gains, following an autonomous increase in wage inflation

show exp1l