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Computable General Equilibrium Modeling, Numerical Simulations in a 2-Country Monetary General Equilibrium Model

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  • Fabio Rumler

    ()
    (Department of Economics, Vienna University of Economics & B.A.)

Abstract

This paper presents the concept of numerical CGE modeling with the help of a 2-country general equilibrium model. In the framework of this simple dynamic monetary model the effects of a (unilateral) monetary and fiscal expansion are simulated. The exchange rate of the home vis-à-vis the foreign currency depreciates in response to both types of shocks. The monetary expansion leads to an increase in home relative to foreign private consumption and to a sharp increase in relative home output in the short run, while in the long run output increases in the foreign country and decreases in the home country. The unilateral fiscal expansion, on the other hand, results in a fall of private consumption in the home relative to the foreign country, and in an increase in relative home output in the short as well as in the long run. The world real interest rate falls quite substantially in response to both shocks.

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Paper provided by Vienna University of Economics, Department of Economics in its series Department of Economics Working Papers with number wuwp065.

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Date of creation: Jun 1999
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Handle: RePEc:wiw:wiwwuw:wuwp065

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  1. A. W. Coats, 1996. "Introduction," History of Political Economy, Duke University Press, vol. 28(5), pages 3-11, Supplemen.
  2. Michael Woodford, 1996. "Control of the Public Debt: A Requirement for Price Stability?," NBER Working Papers 5684, National Bureau of Economic Research, Inc.
  3. Dixon, Peter B. & Parmenter, B.R., 1996. "Computable general equilibrium modelling for policy analysis and forecasting," Handbook of Computational Economics, in: H. M. Amman & D. A. Kendrick & J. Rust (ed.), Handbook of Computational Economics, edition 1, volume 1, chapter 1, pages 3-85 Elsevier.
  4. Rumler, Fabio, 1999. "International Policy Transmissions Before and After Establishing a Monetary Union," Economics Series 71, Institute for Advanced Studies.
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Cited by:
  1. Pasquale Commendatore & Ingrid Kubin & Carmelo Petraglia, 2007. "Footloose capital and productive public services," Department of Economics Working Papers wuwp111, Vienna University of Economics, Department of Economics.
  2. Gerlinde Fellner & Matthias Sutter, 2005. "Causes, consequences, and cures of myopic loss aversion - An experimental investigation," Papers on Strategic Interaction 2005-15, Max Planck Institute of Economics, Strategic Interaction Group.
  3. Annemarie Steidl & Engelbert Stockhammer, 2007. "Coming and leaving. Internal mobility in late Imperial Austria," Department of Economics Working Papers wuwp107, Vienna University of Economics, Department of Economics.
  4. Özlem Onaran, 2007. "International financial markets and fragility in the Eastern Europe: "can it happen" here?," Department of Economics Working Papers wuwp108, Vienna University of Economics, Department of Economics.
  5. Engelbert Stockhammer & Paul Ramskogler, 2009. "Post-Keynesian economics How to move forward," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 6(2), pages 227-246.
  6. Theresa Grafeneder-Weissteiner & Klaus Prettner, 2009. "Agglomeration and population aging in a two region model of exogenous growth," Department of Economics Working Papers wuwp125, Vienna University of Economics, Department of Economics.
  7. Aleksandra Riedl & Silvia Rocha-Akis, 2007. "Testing the tax competition theory: How elastic are national tax bases in western Europe?," Department of Economics Working Papers wuwp112, Vienna University of Economics, Department of Economics.
  8. Theresa Grafeneder-Weissteiner, 2010. "Demographic change, growth and agglomeration," Department of Economics Working Papers wuwp132, Vienna University of Economics, Department of Economics.
  9. Engelbert Stockhammer & Paul Ramskogler, 2007. "Uncertainty and exploitation in history," Department of Economics Working Papers wuwp104, Vienna University of Economics, Department of Economics.

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