' Thirteenth Experiment: A permanent decrease in the ROW’s propensity to import 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-13.A to EXP-13.I discussed in the Appendix

smpl @all

' Store original value of shocked parameter to baseline
genr ye2_0 = ye2

' Decrease the ROW’s propensity to import out of income
smpl 1960 @last
ye2 = 0.996
smpl @all

' Select the second alternative Scenario 13

REEs_mod.scenario(n, a="_13") "Scenario 13"

' Set simulation sample
smpl 1947 @last

' Solve the model for the current sample

REEs_mod.solve(i=p)

' Store shocked value to scenario
genr ye2_13 = ye2

' and get back shocked variable to its baseline value
ye2 = ye2_0

' Creates charts from simulated variables

' Creates the chart in Figure EXP-13.A
smpl 1955 2050
graph exp13a.line ((w_13-w_0)/w_0)*100 (((w_13/pd_13)-(w_0/pd_0))/(w_0/pd_0))*100 ((pd_13-pd_0)/pd_0)*100
exp13a.options linepat
exp13a.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13a.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13a.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp13a.name(1) Effect upon nominal wages
exp13a.name(2) Effect upon real wages
exp13a.name(3) Effect upon prices
exp13a.addtext(t,just(c),just(c)) Figure 13.a: Effect upon real wage rate, following a permanent decrease in the ROW’s propensity to import out of income

show exp13a

' Creates the chart in Figure EXP-13.B
smpl 1955 2050
graph exp13b.line (i_k_13/i_k_0-1)*100 (y_k_13/y_k_0-1)*100 (c_k_13/c_k_0-1)*100
exp13b.options linepat
exp13b.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13b.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13b.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp13b.name(1) Real fixed investment
exp13b.name(2) Real output
exp13b.name(3) Real consumption
exp13b.addtext(t,just(c),just(c)) Figure 13.B: Evolution of consumption, investment and output, following a permanent decrease in the ROW’s propensity to import out of income

show exp13b

' Creates the chart in Figure EXP-13.C
smpl 1955 2050
graph exp13c.line (x_k_13/x_k_0-1)*100 (y_k_13/y_k_0-1)*100 (m_k_13/m_k_0-1)*100
exp13c.options linepat
exp13c.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13c.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13c.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp13c.name(1) Real exports
exp13c.name(2) Real output
exp13c.name(3) Real imports
exp13c.addtext(t,just(c),just(c)) Figure 13.C: Evolution of exports, imports and output, following a permanent decrease in the ROW’s propensity to import out of income

show exp13c

' Creates the chart in Figure EXP-13.D
smpl 1955 2050
graph exp13d.line ((psbr_13/y_13)-(psbr_0/y_0))*100 ((ca_row_13/y_13)-(ca_row_0/y_0))*100
exp13d.options linepat
exp13d.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13d.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13d.name(1) PSBR (Government surplus)
exp13d.name(2) Current Account
exp13d.addtext(t,just(c),just(c)) Figure 13.D: Evolution of government surplus and current account to GDP ratios, following a permanent decrease in the ROW’s propensity to import out of income

show exp13d

' Creates the chart in Figure EXP-13.E
smpl 1955 2050
graph exp13e.line nirr_13-nirr_0
exp13e.options linepat
exp13e.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp13e.name(1) Effect upon net international reserve ratio
exp13e.addtext(t,just(c),just(c)) Figure 13.E: Change in net international reserves ratio, following a permanent decrease in the ROW’s propensity to import out of income

show exp13e

' Creates the chart in Figure EXP-13.F
smpl 1955 2050
graph exp13f.line 101 (er_13-er_0+1)*100 99
exp13f.options linepat
exp13f.setelem(1) lcolor(black) lwidth(2) lpat(2)
exp13f.setelem(2) lcolor(green) lwidth(2) lpat(1)
exp13f.setelem(3) lcolor(black) lwidth(2) lpat(2)
exp13f.name(1) Inflationary pressure threshold
exp13f.name(2) Employment rate
exp13f.name(3) Deflationary pressure threshold
exp13f.addtext(t,just(c),just(c)) Figure EXP-13.F: Evolution of employment rate, following a permanent decrease in the ROW’s propensity to import out of income

show exp13f

' Creates the chart in Figure EXP-13.G
smpl 1955 2050
graph exp13g.line (td_13/y_13-td_0/y_0) (bcbs_13/y_13-bcbs_0/y_0) (gdh_g_13/y_13-gdh_g_0/y_0)
exp13g.options linepat
exp13g.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13g.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13g.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp13g.name(1) Total Government debt
exp13g.name(2) Central Bank bills
exp13g.name(3) Government deposits at Central Bank
exp13g.addtext(t,just(c),just(c)) Figure 13.G: Evolution of government debt, central bank bills, and government deposits at CB, following a permanent decrease in the ROW’s propensity to import out of income

show exp13g

' Creates the chart in Figure EXP-13.H
smpl 1955 2050
graph exp13h.line ((c_k_13-c_k_0)/y_k_0)*100 ((i_k_13-i_k_0)/y_k_0)*100 ((g_k_13-g_k_0)/y_k_0)*100 ((x_k_13-x_k_0)/y_k_0)*100 -((m_k_13-m_k_0)/y_k_0)*100 ((y_k_13-y_k_0)/y_k_0)*100
exp13h.options linepat
exp13h.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13h.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13h.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp13h.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp13h.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp13h.setelem(6) lcolor(orange) lwidth(2) lpat(6)
exp13h.name(1) Real consumption
exp13h.name(2) Real investment
exp13h.name(3) Real government expenditure
exp13h.name(4) Real exports
exp13h.name(5) Real imports
exp13h.name(6) Real GDP
exp13h.addtext(t,just(c),just(c)) Figure 13.H: Contribution to real GDP growth of a permanent decrease in the ROW’s propensity to import out of income

show exp13h

' Creates the chart in Figure EXP-13.I
smpl 1955 2050
graph exp13i.line (((w_13/pr_13)-(w_0/pr_0))/(w_0/pr_0))*100 ((pd_13-pd_0)/pd_0)*100
exp13i.options linepat
exp13i.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13i.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13i.name(1) Effect upon wage to productivity ratio
exp13i.name(2) Effect upon prices
exp13i.addtext(t,just(c),just(c)) Figure 13.I: Inflationary effect, following a permanent decrease in the ROW’s propensity to import out of income

show exp13i

' Creates the chart in Figure EXP-13.J
smpl 1955 2050
graph exp13j.line (xrendog_13/xrendog_0-1)*100
exp13j.options linepat
exp13j.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp13j.name(1) Effect upon shadow exchange rate
exp13j.addtext(t,just(c),just(c)) Figure 13.J: Hypothetical effect upon shadow exchange rate (exchange rate that would prevail if market-determined), following a permanent decrease in the ROW’s propensity to import out of income

show exp13j

' Creates the chart in Figure EXP-13.K
smpl 1955 2050
graph exp13k.line ((ydr_h_k_e_13-ydr_h_k_e_0)/ydr_h_k_e_0)*100 ((v_h_k_13-v_h_k_0)/v_h_k_0)*100
exp13k.options linepat
exp13k.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp13k.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp13k.name(1) Real effect upon regular disposable income
exp13k.name(2) Real effect upon households’ wealth
exp13k.addtext(t,just(c),just(c)) Figure 13.K: Real (income and wealth) effects upon consumption, following a permanent decrease in the ROW’s propensity to import out of income

show exp13k

' Creates the chart in Figure EXP-13.L
smpl 1955 2050
graph exp13l.line (((cg_h_13/pd_13)-(cg_h_0/pd_0))/(cg_h_0/pd_0))*100
exp13l.options linepat
exp13l.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp13l.name(1) Real effect upon capital gains of households
exp13l.addtext(t,just(c),just(c)) Figure 13.L: Real effect upon capital gains, following a permanent decrease in the ROW’s propensity to import out of income

show exp13l