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The Economic Costs To The U.S. Of Closing Its Borders: A Computable General Equilibrium Analysis

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  • P. B. Dixon
  • J. A. Giesecke
  • M. T. Rimmer
  • A. Rose

Abstract

We use a CGE model to simulate the effects of a one-year US border closure. Relative to previously used input-output modeling, CGE modeling offers a flexible framework for capturing bottleneck and labor-market effects. Our analysis suggests that the costs of a prolonged closure could be much greater than indicated by input-output studies. We find that cutting all imports by 95% in an environment of sticky real wages would reduce GDP by 48%. However, if bottleneck imports (mainly oil) were exempt and workers accepted real wage cuts then the GDP reduction would be only 11%.

Suggested Citation

  • P. B. Dixon & J. A. Giesecke & M. T. Rimmer & A. Rose, 2011. "The Economic Costs To The U.S. Of Closing Its Borders: A Computable General Equilibrium Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(1), pages 85-97.
    • Handle: RePEc:taf:defpea:v:22:y:2011:i:1:p:85-97
    DOI: 10.1080/10242694.2010.491658
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    Citations

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    Cited by:

    1. Adam Rose, 2015. "Macroeconomic consequences of terrorist attacks: estimation for the analysis of policies and rules," Chapters, in: Carol Mansfield & V. K. Smith (ed.), Benefit–Cost Analyses for Security Policies, chapter 8, pages 172-200, Edward Elgar Publishing.
    2. J. Nassios & J.A. Giesecke, 2015. "The Macroeconomic and Sectoral Effects of Terrorism in the U.S.: A Reconciliation of CGE and Econometric Approaches," Centre of Policy Studies/IMPACT Centre Working Papers g-256, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Dixon, Peter B. & Rimmer, Maureen T., 2016. "Johansen's legacy to CGE modelling: Originator and guiding light for 50 years," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 421-435.
    4. Georges, Patrick & Mérette, Marcel, 2012. "Toward a North American Security Perimeter? Assessing the trade, FDI, and welfare impacts of liberalizing 9/11 security measures," Economic Modelling, Elsevier, vol. 29(6), pages 2514-2526.
    5. Dixon, Peter & Jerie, Michael & Rimmer, Maureen & Wittwer, Glyn, 2017. "Using a regional CGE model for rapid assessments of the economic implications of terrorism: creating GRAD-ECAT (Generalized, Regional And Dynamic Economic Consequence Analysis Tool," Conference papers 332900, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Zahniser, Steven & Hertz, Thomas & Dixon, Peter B. & Rimmer, Maureen T., 2017. "The Potential Effects of Increased Demand for U.S. Agricultural Exports on Metro and Nonmetro Employment," Economic Research Report 262186, United States Department of Agriculture, Economic Research Service.
    7. Jason Nassios & James A. Giesecke, 2018. "Informing Ex Ante Event Studies with Macro‐Econometric Evidence on the Structural and Policy Impacts of Terrorism," Risk Analysis, John Wiley & Sons, vol. 38(4), pages 804-825, April.
    8. Peter B. Dixon & Michael Jerie & Maureen T. Rimmer & Glyn Wittwer, 2017. "Using a regional CGE model for rapid assessments of the economic implications of terrorism events: creating GRAD-ECAT (Generalized, Regional And Dynamic Economic Consequence Analysis Tool)," Centre of Policy Studies/IMPACT Centre Working Papers g-280, Victoria University, Centre of Policy Studies/IMPACT Centre.

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