' Sixteenth Experiment: A permanent decrease in the 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-16.A to EXP-16.I discussed in the Appendix

smpl @all

' Store original value of shocked parameter to baseline
genr miu2_0 = miu2

' Decrease permanently the propensity to import out of income

smpl 1960 @last
miu2 = 0.996
smpl @all

' Select the second alternative Scenario 16

REEs_mod.scenario(n, a="_16") "Scenario 16"

' Set simulation sample
smpl 1947 @last

' Solve the model for the current sample

REEs_mod.solve(i=p)

' Store shocked value to scenario
genr miu2_16 = miu2

' and get back shocked variable to its baseline value
miu2 = miu2_0

' Creates charts from simulated variables

' Creates the chart in Figure EXP-16.A
smpl 1955 2050
graph exp16a.line ((w_16-w_0)/w_0)*100 (((w_16/pd_16)-(w_0/pd_0))/(w_0/pd_0))*100 ((pd_16-pd_0)/pd_0)*100
exp16a.options linepat
exp16a.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16a.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16a.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp16a.name(1) Effect upon nominal wages
exp16a.name(2) Effect upon real wages
exp16a.name(3) Effect upon prices
exp16a.addtext(t,just(c),just(c)) Figure 16.a: Effect upon real wage rate, following a permanent decrease in the propensity to import out of income

show exp16a

' Creates the chart in Figure EXP-16.B
smpl 1955 2050
graph exp16b.line (i_k_16/i_k_0-1)*100 (y_k_16/y_k_0-1)*100 (c_k_16/c_k_0-1)*100
exp16b.options linepat
exp16b.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16b.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16b.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp16b.name(1) Real fixed investment
exp16b.name(2) Real output
exp16b.name(3) Real consumption
exp16b.addtext(t,just(c),just(c)) Figure 16.B: Evolution of consumption, investment and output, following a permanent decrease in the propensity to import out of income

show exp16b

' Creates the chart in Figure EXP-16.C
smpl 1955 2050
graph exp16c.line (x_k_16/x_k_0-1)*100 (y_k_16/y_k_0-1)*100 (m_k_16/m_k_0-1)*100
exp16c.options linepat
exp16c.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16c.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16c.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp16c.name(1) Real exports
exp16c.name(2) Real output
exp16c.name(3) Real imports
exp16c.addtext(t,just(c),just(c)) Figure 16.C: Evolution of exports, imports and output, following a permanent decrease in the propensity to import out of income

show exp16c

' Creates the chart in Figure EXP-16.D
smpl 1955 2050
graph exp16d.line ((psbr_16/y_16)-(psbr_0/y_0))*100 ((ca_row_16/y_16)-(ca_row_0/y_0))*100
exp16d.options linepat
exp16d.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16d.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16d.name(1) PSBR (Government surplus)
exp16d.name(2) Current Account
exp16d.addtext(t,just(c),just(c)) Figure 16.D: Evolution of government surplus and current account to GDP ratios, following a permanent decrease in the propensity to import out of income

show exp16d

' Creates the chart in Figure EXP-16.E
smpl 1955 2050
graph exp16e.line nirr_16-nirr_0
exp16e.options linepat
exp16e.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp16e.name(1) Effect upon net international reserve ratio
exp16e.addtext(t,just(c),just(c)) Figure 16.E: Change in net international reserves ratio, following a permanent decrease in the propensity to import out of income

show exp16e

' Creates the chart in Figure EXP-16.F
smpl 1955 2050
graph exp16f.line 101 (er_16-er_0+1)*100 99
exp16f.options linepat
exp16f.setelem(1) lcolor(black) lwidth(2) lpat(2)
exp16f.setelem(2) lcolor(green) lwidth(2) lpat(1)
exp16f.setelem(3) lcolor(black) lwidth(2) lpat(2)
exp16f.name(1) Inflationary pressure threshold
exp16f.name(2) Employment rate
exp16f.name(3) Deflationary pressure threshold
exp16f.addtext(t,just(c),just(c)) Figure EXP-16.F: Evolution of employment rate, following a permanent decrease in the propensity to import out of income

show exp16f

' Creates the chart in Figure EXP-16.G
smpl 1955 2050
graph exp16g.line (td_16/y_16-td_0/y_0) (bcbs_16/y_16-bcbs_0/y_0) (gdh_g_16/y_16-gdh_g_0/y_0)
exp16g.options linepat
exp16g.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16g.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16g.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp16g.name(1) Total Government debt
exp16g.name(2) Central Bank bills
exp16g.name(3) Government deposits at Central Bank
exp16g.addtext(t,just(c),just(c)) Figure 16.G: Evolution of government debt, central bank bills, and government deposits at CB, following a permanent decrease in the propensity to import out of income

show exp16g

' Creates the chart in Figure EXP-16.H
smpl 1955 2050
graph exp16h.line ((c_k_16-c_k_0)/y_k_0)*100 ((i_k_16-i_k_0)/y_k_0)*100 ((g_k_16-g_k_0)/y_k_0)*100 ((x_k_16-x_k_0)/y_k_0)*100 -((m_k_16-m_k_0)/y_k_0)*100 ((y_k_16-y_k_0)/y_k_0)*100
exp16h.options linepat
exp16h.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16h.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16h.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp16h.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp16h.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp16h.setelem(6) lcolor(orange) lwidth(2) lpat(6)
exp16h.name(1) Real consumption
exp16h.name(2) Real investment
exp16h.name(3) Real government expenditure
exp16h.name(4) Real exports
exp16h.name(5) Real imports
exp16h.name(6) Real GDP
exp16h.addtext(t,just(c),just(c)) Figure 16.H: Contribution to real GDP growth of a permanent decrease in the propensity to import out of income

show exp16h

' Creates the chart in Figure EXP-16.I
smpl 1955 2050
graph exp16i.line (((w_16/pr_16)-(w_0/pr_0))/(w_0/pr_0))*100 ((pd_16-pd_0)/pd_0)*100
exp16i.options linepat
exp16i.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16i.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16i.name(1) Effect upon wage to productivity ratio
exp16i.name(2) Effect upon prices
exp16i.addtext(t,just(c),just(c)) Figure 16.I: Inflationary effect, following a permanent decrease in the propensity to import out of income

show exp16i

' Creates the chart in Figure EXP-16.J
smpl 1955 2050
graph exp16j.line (xrendog_16/xrendog_0-1)*100
exp16j.options linepat
exp16j.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp16j.name(1) Effect upon shadow exchange rate
exp16j.addtext(t,just(c),just(c)) Figure 16.J: Hypothetical effect upon shadow exchange rate (exchange rate that would prevail if market-determined), following a permanent decrease in the propensity to import out of income

show exp16j

' Creates the chart in Figure EXP-16.K
smpl 1955 2050
graph exp16k.line ((ydr_h_k_e_16-ydr_h_k_e_0)/ydr_h_k_e_0)*100 ((v_h_k_16-v_h_k_0)/v_h_k_0)*100
exp16k.options linepat
exp16k.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp16k.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp16k.name(1) Real effect upon regular disposable income
exp16k.name(2) Real effect upon households’ wealth
exp16k.addtext(t,just(c),just(c)) Figure 16.K: Real (income and wealth) effects upon consumption, following a permanent decrease in the propensity to import out of income

show exp16k

' Creates the chart in Figure EXP-16.L
smpl 1955 2050
graph exp16l.line (((cg_h_16/pd_16)-(cg_h_0/pd_0))/(cg_h_0/pd_0))*100
exp16l.options linepat
exp16l.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp16l.name(1) Real effect upon capital gains of households
exp16l.addtext(t,just(c),just(c)) Figure 16.L: Real effect upon capital gains, following a permanent decrease in the propensity to import out of income

show exp16l