' Tenth Experiment: A permanent increase in the propensity to consume out of income

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

' This program generates figures EXP-10.A to EXP-10.I discussed in the Appendix

smpl @all

' Store original value of shocked parameter to baseline
genr alpha1_0 = alpha1

' Increase the propensity to consume out of income
smpl 1960 @last
alpha1 = 0.805
smpl @all

' Select the second alternative Scenario 10

REEs_mod.scenario(n, a="_10") "Scenario 10"

' Set simulation sample
smpl 1947 @last

' Solve the model for the current sample

REEs_mod.solve(i=p)

' Store shocked value to scenario
genr alpha1_10 = alpha1

' and get back shocked variable to its baseline value
alpha1 = alpha1_0

' Creates charts from simulated variables

' Creates the chart in Figure EXP-10.A
smpl 1955 2050
graph exp10a.line ((w_10-w_0)/w_0)*100 (((w_10/pd_10)-(w_0/pd_0))/(w_0/pd_0))*100 ((pd_10-pd_0)/pd_0)*100
exp10a.options linepat
exp10a.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10a.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10a.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp10a.name(1) Effect upon nominal wages
exp10a.name(2) Effect upon real wages
exp10a.name(3) Effect upon prices
exp10a.addtext(t,just(c),just(c)) Figure 10.a: Effect upon real wage rate, following a permanent increase in the propensity to consume out of income

show exp10a

' Creates the chart in Figure EXP-10.B
smpl 1955 2050
graph exp10b.line (i_k_10/i_k_0-1)*100 (y_k_10/y_k_0-1)*100 (c_k_10/c_k_0-1)*100
exp10b.options linepat
exp10b.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10b.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10b.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp10b.name(1) Real fixed investment
exp10b.name(2) Real output
exp10b.name(3) Real consumption
exp10b.addtext(t,just(c),just(c)) Figure 10.B: Evolution of consumption, investment and output, following a permanent increase in the propensity to consume out of income

show exp10b

' Creates the chart in Figure EXP-10.C
smpl 1955 2050
graph exp10c.line (x_k_10/x_k_0-1)*100 (y_k_10/y_k_0-1)*100 (m_k_10/m_k_0-1)*100
exp10c.options linepat
exp10c.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10c.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10c.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp10c.name(1) Real exports
exp10c.name(2) Real output
exp10c.name(3) Real imports
exp10c.addtext(t,just(c),just(c)) Figure 10.C: Evolution of exports, imports and output, following a permanent increase in the propensity to consume out of income

show exp10c

' Creates the chart in Figure EXP-10.D
smpl 1955 2050
graph exp10d.line ((psbr_10/y_10)-(psbr_0/y_0))*100 ((ca_row_10/y_10)-(ca_row_0/y_0))*100
exp10d.options linepat
exp10d.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10d.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10d.name(1) PSBR (Government surplus)
exp10d.name(2) Current Account
exp10d.addtext(t,just(c),just(c)) Figure 10.D: Evolution of government surplus and current account to GDP ratios, following a permanent increase in the propensity to consume out of income

show exp10d

' Creates the chart in Figure EXP-10.E
smpl 1955 2050
graph exp10e.line nirr_10-nirr_0
exp10e.options linepat
exp10e.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp10e.name(1) Effect upon net international reserve ratio
exp10e.addtext(t,just(c),just(c)) Figure 10.E: Change in net international reserves ratio, following a permanent increase in the propensity to consume out of income

show exp10e

' Creates the chart in Figure EXP-10.F
smpl 1955 2050
graph exp10f.line 101 (er_10-er_0+1)*100 99
exp10f.options linepat
exp10f.setelem(1) lcolor(black) lwidth(2) lpat(2)
exp10f.setelem(2) lcolor(green) lwidth(2) lpat(1)
exp10f.setelem(3) lcolor(black) lwidth(2) lpat(2)
exp10f.name(1) Inflationary pressure threshold
exp10f.name(2) Employment rate
exp10f.name(3) Deflationary pressure threshold
exp10f.addtext(t,just(c),just(c)) Figure EXP-10.F: Evolution of employment rate, following a permanent increase in the propensity to consume out of income

show exp10f

' Creates the chart in Figure EXP-10.G
smpl 1955 2050
graph exp10g.line (td_10/y_10-td_0/y_0) (bcbs_10/y_10-bcbs_0/y_0) (gdh_g_10/y_10-gdh_g_0/y_0)
exp10g.options linepat
exp10g.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10g.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10g.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp10g.name(1) Total Government debt
exp10g.name(2) Central Bank bills
exp10g.name(3) Government deposits at Central Bank
exp10g.addtext(t,just(c),just(c)) Figure 10.G: Evolution of government debt, central bank bills, and government deposits at CB, following a permanent increase in the propensity to consume out of income

show exp10g

' Creates the chart in Figure EXP-10.H
smpl 1955 2050
graph exp10h.line ((c_k_10-c_k_0)/y_k_0)*100 ((i_k_10-i_k_0)/y_k_0)*100 ((g_k_10-g_k_0)/y_k_0)*100 ((x_k_10-x_k_0)/y_k_0)*100 -((m_k_10-m_k_0)/y_k_0)*100 ((y_k_10-y_k_0)/y_k_0)*100
exp10h.options linepat
exp10h.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10h.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10h.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp10h.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp10h.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp10h.setelem(6) lcolor(orange) lwidth(2) lpat(6)
exp10h.name(1) Real consumption
exp10h.name(2) Real investment
exp10h.name(3) Real government expenditure
exp10h.name(4) Real exports
exp10h.name(5) Real imports
exp10h.name(6) Real GDP
exp10h.addtext(t,just(c),just(c)) Figure 10.H: Contribution to real GDP growth of an increase in the propensity to consume out of income

show exp10h

' Creates the chart in Figure EXP-10.I
smpl 1955 2050
graph exp10i.line (((w_10/pr_10)-(w_0/pr_0))/(w_0/pr_0))*100 ((pd_10-pd_0)/pd_0)*100
exp10i.options linepat
exp10i.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10i.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10i.name(1) Effect upon wage to productivity ratio
exp10i.name(2) Effect upon prices
exp10i.addtext(t,just(c),just(c)) Figure 10.I: Inflationary effect, following a permanent increase in the propensity to consume out of income

show exp10i

' Creates the chart in Figure EXP-10.J
smpl 1955 2050
graph exp10j.line (xrendog_10/xrendog_0-1)*100
exp10j.options linepat
exp10j.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp10j.name(1) Effect upon shadow exchange rate
exp10j.addtext(t,just(c),just(c)) Figure 10.J: Hypothetical effect upon shadow exchange rate (exchange rate that would prevail if market-determined), following a permanent increase in the propensity to consume out of income

show exp10j

' Creates the chart in Figure EXP-10.K
smpl 1955 2050
graph exp10k.line ((ydr_h_k_e_10-ydr_h_k_e_0)/ydr_h_k_e_0)*100 ((v_h_k_10-v_h_k_0)/v_h_k_0)*100
exp10k.options linepat
exp10k.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp10k.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp10k.name(1) Real effect upon regular disposable income
exp10k.name(2) Real effect upon households’ wealth
exp10k.addtext(t,just(c),just(c)) Figure 10.K: Real (income and wealth) effects upon consumption, following a permanent increase in the propensity to consume out of income

show exp10k

' Creates the chart in Figure EXP-10.L
smpl 1955 2050
graph exp10l.line (((cg_h_10/pd_10)-(cg_h_0/pd_0))/(cg_h_0/pd_0))*100
exp10l.options linepat
exp10l.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp10l.name(1) Real effect upon capital gains of households
exp10l.addtext(t,just(c),just(c)) Figure 10.L: Real effect upon capital gains, following a permanent increase in the propensity to consume out of income

show exp10l