' Second Experiment: A one-period increase in the growth rate of govt expenditures

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

' This program generates Graphs EXP-2.A to EXP-2.I discussed in the Appendix

smpl @all

' Store original value of shocked parameter to baseline
genr gr_g_natural_0 = gr_g_natural

' Increase the growth rate of govt expenditures for one period only
smpl 1960 1960
gr_g_natural = 0.06
smpl @all

' Select the second alternative Scenario 2

REEs_mod.scenario(n, a="_2") "Scenario 2"

' Set simulation sample
smpl 1947 @last

' Solve the model for the current sample

REEs_mod.solve(i=p)

' Store shocked value to scenario
genr gr_g_natural_2 = gr_g_natural

' and get back shocked variable to its baseline value
gr_g_natural = gr_g_natural_0

' Creates charts from simulated variables

' Creates the chart in Graph EXP-2.A
smpl 1955 2050
graph exp2a.line ((w_2-w_0)/w_0)*100 (((w_2/pd_2)-(w_0/pd_0))/(w_0/pd_0))*100 ((pd_2-pd_0)/pd_0)*100
exp2a.options linepat
exp2a.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2a.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2a.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp2a.name(1) Effect upon nominal wages
exp2a.name(2) Effect upon real wages
exp2a.name(3) Effect upon prices
exp2a.addtext(t,just(c),just(c)) Graph III.4.19: Effect upon real wage rate, following a one-period increase in the growth rate of govt expenditures

show exp2a

' Creates the chart in Graph EXP-2.B
smpl 1955 2050
graph exp2b.line (i_k_2/i_k_0-1)*100 (y_k_2/y_k_0-1)*100 (c_k_2/c_k_0-1)*100
exp2b.options linepat
exp2b.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2b.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2b.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp2b.name(1) Real fixed investment
exp2b.name(2) Real output
exp2b.name(3) Real consumption
exp2b.addtext(t,just(c),just(c)) Graph 2.B: Evolution of consumption, investment and output, following a one-period increase in the growth rate of govt expenditures

show exp2b

' Creates the chart in Graph EXP-2.C
smpl 1955 2050
graph exp2c.line (x_k_2/x_k_0-1)*100 (y_k_2/y_k_0-1)*100 (m_k_2/m_k_0-1)*100
exp2c.options linepat
exp2c.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2c.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2c.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp2c.name(1) Real exports
exp2c.name(2) Real output
exp2c.name(3) Real imports
exp2c.addtext(t,just(c),just(c)) Graph 2.C: Evolution of exports, imports and output, following a one-period increase in the growth rate of govt expenditures

show exp2c

' Creates the chart in Graph EXP-2.D
smpl 1955 2050
graph exp2d.line ((psbr_2/y_2)-(psbr_0/y_0))*100 ((ca_row_2/y_2)-(ca_row_0/y_0))*100
exp2d.options linepat
exp2d.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2d.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2d.name(1) PSBR (Government surplus)
exp2d.name(2) Current Account
exp2d.addtext(t,just(c),just(c)) Graph III.4.21: Evolution of government and current account to GDP ratios, following one-period increase in the growth rate of govt expenditures

show exp2d

' Creates the chart in Graph EXP-2.E
smpl 1955 2050
graph exp2e.line (nirr_2-nirr_0)*12
exp2e.options linepat
exp2e.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp2e.name(1) Effect upon net international reserve ratio
exp2e.addtext(t,just(c),just(c)) Graph III.4.20: Change in net international reserves ratio, following a one-period increase in the growth rate of govt expenditures

show exp2e

' Creates the chart in Graph EXP-2.F
smpl 1955 2050
graph exp2f.line 101 (er_2-er_0+1)*100 99
exp2f.options linepat
exp2f.setelem(1) lcolor(black) lwidth(2) lpat(2)
exp2f.setelem(2) lcolor(green) lwidth(2) lpat(1)
exp2f.setelem(3) lcolor(black) lwidth(2) lpat(2)
exp2f.name(1) Inflationary pressure threshold
exp2f.name(2) Employment rate
exp2f.name(3) Deflationary pressure threshold
exp2f.addtext(t,just(c),just(c)) Graph III.4.18: Evolution of employment rate, following a one-period increase in the growth rate of govt expenditures

show exp2f

' Creates the chart in Graph EXP-2.G
smpl 1955 2050
graph exp2g.line (td_2/y_2-td_0/y_0)*100 (bcbs_2/y_2-bcbs_0/y_0)*100 (gdh_g_2/y_2-gdh_g_0/y_0)*100
exp2g.options linepat
exp2g.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2g.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2g.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp2g.name(1) Total Government debt
exp2g.name(2) Central Bank bills
exp2g.name(3) Government deposits at Central Bank
exp2g.addtext(t,just(c),just(c)) Graph III.4.22: Evolution of govt debt, cb bills, and govt deposits at CB, following a one-period increase in the growth rate of govt expenditures

show exp2g

' Creates the chart in Graph EXP-2.H
smpl 1955 2050
graph exp2h.line ((c_k_2-c_k_0)/y_k_0)*100 ((i_k_2-i_k_0)/y_k_0)*100 ((g_k_2-g_k_0)/y_k_0)*100 ((x_k_2-x_k_0)/y_k_0)*100 -((m_k_2-m_k_0)/y_k_0)*100 ((y_k_2-y_k_0)/y_k_0)*100
exp2h.options linepat
exp2h.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2h.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2h.setelem(3) lcolor(red) lwidth(2) lpat(3)
exp2h.setelem(4) lcolor(black) lwidth(2) lpat(4)
exp2h.setelem(5) lcolor(yellow) lwidth(2) lpat(5)
exp2h.setelem(6) lcolor(orange) lwidth(2) lpat(6)
exp2h.name(1) Real consumption
exp2h.name(2) Real investment
exp2h.name(3) Real government expenditure
exp2h.name(4) Real exports
exp2h.name(5) Real imports
exp2h.name(6) Real GDP
exp2h.addtext(t,just(c),just(c)) Graph III.4.17: Contribution to real GDP growth of a one-period increase in the growth rate of govt expenditures

show exp2h

' Creates the chart in Graph EXP-2.I
smpl 1955 2050
graph exp2i.line (((w_2/pr_2)-(w_0/pr_0))/(w_0/pr_0))*100 ((pd_2-pd_0)/pd_0)*100
exp2i.options linepat
exp2i.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2i.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2i.name(1) Effect upon wage to productivity ratio
exp2i.name(2) Effect upon prices
exp2i.addtext(t,just(c),just(c)) Graph 2.I: Inflationary effect, following a one-period increase in the growth rate of govt expenditures

show exp2i

' Creates the chart in Graph EXP-2.J
smpl 1955 2050
graph exp2j.line (xrendog_2/xrendog_0-1)*100
exp2j.options linepat
exp2j.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp2j.name(1) Effect upon shadow exchange rate
exp2j.addtext(t,just(c),just(c)) Graph 2.J: Hypothetical effect upon shadow exchange rate (exchange rate that would prevail if market-determined), following a one-period increase in the growth rate of govt expenditures

show exp2j

' Creates the chart in Graph EXP-2.K
smpl 1955 2050
graph exp2k.line ((ydr_h_k_e_2-ydr_h_k_e_0)/ydr_h_k_e_0)*100 ((v_h_k_2-v_h_k_0)/v_h_k_0)*100
exp2k.options linepat
exp2k.setelem(1) lcolor(blue) lwidth(2) lpat(1)
exp2k.setelem(2) lcolor(green) lwidth(2) lpat(2)
exp2k.name(1) Real effect upon regular disposable income
exp2k.name(2) Real effect upon households’ wealth
exp2k.addtext(t,just(c),just(c)) Graph 2.K: Real (income and wealth) effects upon consumption, following a one-period increase in the growth rate of govt expenditures

show exp2k

' Creates the chart in Graph EXP-2.L
smpl 1955 2050
graph exp2l.line (((cg_h_2/pd_2)-(cg_h_0/pd_0))/(cg_h_0/pd_0))*100
exp2l.options linepat
exp2l.setelem(1) lcolor(green) lwidth(2) lpat(2)
exp2l.name(1) Real effect upon capital gains of households
exp2l.addtext(t,just(c),just(c)) Graph 2.L: Real effect upon capital gains, following a one-period increase in the growth rate of govt expenditures

show exp2l