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