Simulating the U.S. Recession with and without the Obama package: the role of excess capacity

[img]
Preview
g-193.pdf - Published Version (304kB) | Preview
Available under license: Creative Commons Attribution

Dixon, Peter and Rimmer, Maureen T (2010) Simulating the U.S. Recession with and without the Obama package: the role of excess capacity. Working Paper. Centre of Policy Studies (CoPS).

Abstract

Simulations with dynamic, single-country, CGE models typically imply that reductions in domestic demand, e.g. a cut in investment, generate increases in exports and reductions in imports facilitated by real depreciation. However, currently in the U.S. a large reduction in investment is occurring simultaneously with a contraction in exports and little movement in the real exchange rate. We show that to describe this situation it is necessary to drop the standard CGE assumption that capital is always fully employed in every industry. After introducing an excess-capacity specification, we simulate the U.S. recession with and without the Obama stimulus package.

Additional Information

CoPS/IMPACT Working Paper Number G-193

Item type Monograph (Working Paper)
URI https://vuir.vu.edu.au/id/eprint/29399
Official URL http://www.copsmodels.com/elecpapr/g-193.htm
ISBN 9781921654008
Subjects Historical > FOR Classification > 1402 Applied Economics
Current > Division/Research > Centre of Policy Studies (CoPS)
Keywords C68; D50; E30; E60; U.S recession; CGE modelling; excess capacity; sticky rents; mark-up pricing
Download/View statistics View download statistics for this item

Search Google Scholar

Repository staff login