The Economic Consequences of the U.S. Border Closure in Response to a Security Threat: A Dynamic CGE Assessment
We investigate the economic consequences of a twelve-month closure of U.S. borders in the form of cessation of trade, tourism and immigration flows. The federal government might contemplate such action in the face of an extreme terrorism or public health threat. Using a computable general equilibrium model, we find that border closure would cause substantial economic loss. However this damage is significantly reduced when critical imports (such as energy) are either exempted from the policy, or made available through use of domestic stockpiles (such as the Strategic Petroleum Reserve). Economic damage is reduced further if workers accept lower real wages for the duration of the security crisis. We argue that if border closure were ever to be contemplated as a response to a security or public health threat, it would be prudent to keep its scope to a minimum, to make its duration as short as possible, to allow market responses to run their course, and to enact countervailing policies that can help minimize the economic losses.
|Date of creation:||Apr 2009|
|Date of revision:|
|Publication status:||Published in 'The economic costs to the U.S. of closing its borders: a computable general equilibrium analysis', Defence and Peace Economics, Vol. 22(1), February 2011, pp. 85-97.|
|Contact details of provider:|| Postal: PO Box 14428, Melbourne, Victoria, 8001|
Phone: 03 9919 1877
Web page: http://www.copsmodels.com/about.htm
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Greene, David L & Jones, Donald W & Leiby, Paul N, 1998. "The outlook for US oil dependence," Energy Policy, Elsevier, vol. 26(1), pages 55-69, January.
- Dixon, Peter B. & Pearson, K.R. & Picton, Mark R. & Rimmer, Maureen T., 2005. "Rational expectations for large CGE models: A practical algorithm and a policy application," Economic Modelling, Elsevier, vol. 22(6), pages 1001-1019, December.
When requesting a correction, please mention this item's handle: RePEc:cop:wpaper:g-184. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Horridge)
If references are entirely missing, you can add them using this form.