' Nineteenth Experiment: A decrease in the rate of bank reserve requirements

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

' This program generates figures EXP-19.A to EXP-19.I discussed in the Appendix

smpl @all

' Store original value of shocked parameter to baseline
genr rom1_t_0 = rom1_t
genr rom2_t_0 = rom2_t
genr robb_t_0 = robb_t

' Increase the rate of bank reserve requirements
smpl 1960 @last
rom1_t = 0.0625
rom2_t = 0.0600
robb_t = 0.0500
smpl @all

' Select the second alternative Scenario 19

REEs_mod.scenario(n, a="_19") "Scenario 19"

' Set simulation sample
smpl 1947 @last

' Solve the model for the current sample

REEs_mod.solve(i=p)

' Store shocked value to scenario
genr rom1_t_19 = rom1_t
genr rom2_t_19 = rom2_t
genr robb_t_19 = robb_t

' and get back shocked variable to its baseline value
rom1_t = rom1_t_0
rom2_t = rom2_t_0
robb_t = robb_t_0

' Creates charts from simulated variables

' Creates the chart in Figure EXP-19.A
smpl 1955 2050
graph exp19a.line ((w_19-w_0)/w_0)*100 (((w_19/pd_19)-(w_0/pd_0))/(w_0/pd_0))*100 ((pd_19-pd_0)/pd_0)*100
exp19a.options linepat
exp19a.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19a.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19a.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp19a.name(1) Effect upon nominal wages
exp19a.name(2) Effect upon real wages
exp19a.name(3) Effect upon prices
exp19a.addtext(t,just(c),just(c)) Figure 19.a: Effect upon real wage rate, following a decrease in the rate of bank reserve requirements

show exp19a

' Creates the chart in Figure EXP-19.B
smpl 1955 2050
graph exp19b.line (i_k_19/i_k_0-1)*100 (y_k_19/y_k_0-1)*100 (c_k_19/c_k_0-1)*100
exp19b.options linepat
exp19b.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19b.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19b.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp19b.name(1) Real fixed investment
exp19b.name(2) Real output
exp19b.name(3) Real consumption
exp19b.addtext(t,just(c),just(c)) Figure 19.B: Evolution of consumption, investment and output, following a decrease in the rate of bank reserve requirements

show exp19b

' Creates the chart in Figure EXP-19.C
smpl 1955 2050
graph exp19c.line (x_k_19/x_k_0-1)*100 (y_k_19/y_k_0-1)*100 (m_k_19/m_k_0-1)*100
exp19c.options linepat
exp19c.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19c.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19c.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp19c.name(1) Real exports
exp19c.name(2) Real output
exp19c.name(3) Real imports
exp19c.addtext(t,just(c),just(c)) Figure 19.C: Evolution of exports, imports and output, following a decrease in the rate of bank reserve requirements

show exp19c

' Creates the chart in Figure EXP-19.D
smpl 1955 2050
graph exp19d.line ((psbr_19/y_19)-(psbr_0/y_0))*100 ((ca_row_19/y_19)-(ca_row_0/y_0))*100
exp19d.options linepat
exp19d.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19d.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19d.name(1) PSBR (Government surplus)
exp19d.name(2) Current Account
exp19d.addtext(t,just(c),just(c)) Figure 19.D: Evolution of government surplus and current account to GDP ratios, following a decrease in the rate of bank reserve requirements

show exp19d

' Creates the chart in Figure EXP-19.E
smpl 1955 2050
graph exp19e.line nirr_19-nirr_0
exp19e.options linepat
exp19e.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp19e.name(1) Effect upon net international reserve ratio
exp19e.addtext(t,just(c),just(c)) Figure 19.E: Change in net international reserves ratio, following a decrease in the rate of bank reserve requirements

show exp19e

' Creates the chart in Figure EXP-19.F
smpl 1955 2050
graph exp19f.line 101 (er_19-er_0+1)*100 99
exp19f.options linepat
exp19f.setelem(1) lcolor(black) lwidth(2) lpat(2)
exp19f.setelem(2) lcolor(green) lwidth(2) lpat(1)
exp19f.setelem(3) lcolor(black) lwidth(2) lpat(2)
exp19f.name(1) Inflationary pressure threshold
exp19f.name(2) Employment rate
exp19f.name(3) Deflationary pressure threshold
exp19f.addtext(t,just(c),just(c)) Figure EXP-19.F: Evolution of employment rate, following a decrease in the rate of bank reserve requirements

show exp19f

' Creates the chart in Figure EXP-19.G
smpl 1955 2050
graph exp19g.line (td_19/y_19-td_0/y_0) (bcbs_19/y_19-bcbs_0/y_0) (gdh_g_19/y_19-gdh_g_0/y_0)
exp19g.options linepat
exp19g.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19g.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19g.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp19g.name(1) Total Government debt
exp19g.name(2) Central Bank bills
exp19g.name(3) Government deposits at Central Bank
exp19g.addtext(t,just(c),just(c)) Figure 19.G: Evolution of government debt, central bank bills, and government deposits at CB, following a decrease in the rate of bank reserve requirements

show exp19g

' Creates the chart in Figure EXP-19.H
smpl 1955 2050
graph exp19h.line ((c_k_19-c_k_0)/y_k_0)*100 ((i_k_19-i_k_0)/y_k_0)*100 ((g_k_19-g_k_0)/y_k_0)*100 ((x_k_19-x_k_0)/y_k_0)*100 -((m_k_19-m_k_0)/y_k_0)*100 ((y_k_19-y_k_0)/y_k_0)*100
exp19h.options linepat
exp19h.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19h.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19h.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp19h.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp19h.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp19h.setelem(6) lcolor(orange) lwidth(2) lpat(6)
exp19h.name(1) Real consumption
exp19h.name(2) Real investment
exp19h.name(3) Real government expenditure
exp19h.name(4) Real exports
exp19h.name(5) Real imports
exp19h.name(6) Real GDP
exp19h.addtext(t,just(c),just(c)) Figure 19.H: Contribution to real GDP growth of a decrease in the rate of bank reserve requirements

show exp19h

' Creates the chart in Figure EXP-19.I
smpl 1955 2050
graph exp19i.line (((w_19/pr_19)-(w_0/pr_0))/(w_0/pr_0))*100 ((pd_19-pd_0)/pd_0)*100
exp19i.options linepat
exp19i.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19i.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19i.name(1) Effect upon wage to productivity ratio
exp19i.name(2) Effect upon prices
exp19i.addtext(t,just(c),just(c)) Figure 19.I: Inflationary effect, following a decrease in the rate of bank reserve requirements

show exp19i

' Creates the chart in Figure EXP-19.J
smpl 1955 2050
graph exp19j.line (xrendog_19/xrendog_0-1)*100
exp19j.options linepat
exp19j.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp19j.name(1) Effect upon shadow exchange rate
exp19j.addtext(t,just(c),just(c)) Figure 19.J: Hypothetical effect upon shadow exchange rate (exchange rate that would prevail if market-determined), following a decrease in the rate of bank reserve requirements

show exp19j

' Creates the chart in Figure EXP-19.K
smpl 1955 2050
graph exp19k.line ((ydr_h_k_e_19-ydr_h_k_e_0)/ydr_h_k_e_0)*100 ((v_h_k_19-v_h_k_0)/v_h_k_0)*100
exp19k.options linepat
exp19k.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19k.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19k.name(1) Real effect upon regular disposable income
exp19k.name(2) Real effect upon households’ wealth
exp19k.addtext(t,just(c),just(c)) Figure 19.K: Real (income and wealth) effects upon consumption, following a decrease in the rate of bank reserve requirements

show exp19k

' Creates the chart in Figure EXP-19.L
smpl 1955 2050
graph exp19l.line (((cg_h_19/pd_19)-(cg_h_0/pd_0))/(cg_h_0/pd_0))*100
exp19l.options linepat
exp19l.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp19l.name(1) Real effect upon capital gains of households
exp19l.addtext(t,just(c),just(c)) Figure 19.L: Real effect upon capital gains, following a decrease in the rate of bank reserve requirements

show exp19l

' Creates the chart in Figure EXP-19.O
smpl 1955 2050
graph exp19o.line rm_19-rm_0 rbg_19-rbg_0 rbb_19-rbb_0 rbf_19-rbf_0 rl_19-rl_0 rlcb_19-rlcb_0
exp19o.options linepat
exp19o.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19o.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19o.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp19o.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp19o.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp19o.setelem(6) lcolor(orange) lwidth(2) lpat(6)
exp19o.name(1) Effect upon deposit rate
exp19o.name(2) Effect upon T-Bills rate
exp19o.name(3) Effect upon Bank CDs rate
exp19o.name(4) Effect upon Corporate-Bills (Commercial paper) rate
exp19o.name(5) Effect upon Loans rate
exp19o.name(6) Effect upon Discount rate
exp19o.addtext(t,just(c),just(c)) Figure 19.O: Effect upon short-term rates, following a decrease in the rate of bank reserve requirements

show exp19o

' Creates the chart in Figure EXP-19.P
smpl 1955 2050
graph exp19p.line rblg_19-rblg_0 rblf_19-rblf_0 rk_19-rk_0 fcrblg_19-fcrblg_0
exp19p.options linepat
exp19p.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp19p.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp19p.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp19p.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp19p.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp19p.name(1) Effect upon T-Bonds rate
exp19p.name(2) Effect upon Corporate-Bonds rate
exp19p.name(3) Effect upon Corporate Dividens yield
exp19p.name(4) Effect upon Sovereign Bonds rate
exp19p.name(5) Effect upon Loans rate
exp19p.addtext(t,just(c),just(c)) Figure 19.P: Effect upon long-term rates, following a decrease in the rate of bank reserve requirements

show exp19p