Table of contents Chapter 3 Notes on EViews version Notation Copyright Comments Guestbook
Model SIM - Model SIMEX - A guide to Table 3.4
A more detailed guide to working out the numbers in table 3.4 on page 69 is available from the following file: Guide2Table3_4.pdf
Model SIMThere are two versions of model SIM used in the book, based on different starting values. Version A of the program will generate model SIM, "starting with the beginning of the world", to obtain results in Table 3.4, as described in par. 3.4.1, and figures 3.2 & 3.3, discussed in par. 3.5. Download: gl03sim_a (Eviews versions 5 to 8) or gl03sim_a_v4 (Eviews 4.1) Version B of the program will generate model SIM, starting from steady state values, to obtain results in figures 3.1 and 3.5, as discussed in par. 3.5 and 3.6. Download: gl03sim_b (Eviews versions 5 to 8) gl03sim_b_v4 (Eviews 4.1) Version C of the program will generate model SIM, starting from steady state values, to obtain results in figure 3.8, and study the effects of a change in the propensity to consume out of disposable income. Download: gl03sim_c (Eviews versions 5 to 8) or gl03sim_c_v4 (Eviews 4.1) Version D of the program will generate model SIM, starting from steady state values, to obtain results on the mean lag in the appendix. Download: gl03sim_d (Eviews versions 5 to 8) or gl03sim_d_v4 (Eviews 4.1) Version A of the macro follows, with comments highlighted in green. |
' Create a workfile, naming it SIM, to hold annual data from 1945 to 2010 wfcreate(wf=sim, page=annual) a 1945 2010 ' Creates and documents series series c_d c_d.displayname Consumption goods demand by households series c_s c_s.displayname Consumption goods supply series g_d g_d.displayname Government goods, demand series g_s g_s.displayname Government goods, supply series h_h h_h.displayname Cash money held by households series h_s h_s.displayname Cash money supplied by government series n_d n_d.displayname Demand for labour series n_s n_s.displayname Supply of labour series t_d t_d.displayname Taxes, "demand" series t_s t_s.displayname Taxes, "supply" series w w.displayname Wage rate series y y.displayname Income = GDP series yd yd.displayname Disposable income of households ' Generate parameters series alpha1 alpha1.displayname Propensity to consume out of income series alpha2 alpha2.displayname Propensity to consume out of wealth series theta theta.displayname Tax rate ' Set sample size to all workfile range smpl @all ' Assign values for ' PARAMETERS alpha1=0.6 alpha2=0.4 theta=0.2 ' EXOGENOUS ' note: government expenditure is zero up to 1954 smpl @first 1959 g_d=0 smpl 1960 @last g_d=20 smpl @all w=1 ' Starting values for stocks h_h = 0 h_s = 0 ' Create a model object, and name it sim_mod model sim_mod ' Add equations to model SIM ' Equations which equalise demands and supplies sim_mod.append c_s = c_d sim_mod.append g_s = g_d sim_mod.append t_s = t_d sim_mod.append n_s = n_d ' Disposable income derived from accounting identity sim_mod.append yd = w*n_s - t_s ' Tax payments sim_mod.append t_d = theta*w*n_s ' Consumption function sim_mod.append c_d = alpha1*yd + alpha2*h_h(-1) ' Increase in cash money, as a result of government deficit sim_mod.append h_s = h_s(-1) + g_d - t_d ' Increase in cash held by households sim_mod.append h_h = h_h(-1) + yd - c_d ' Determination of output sim_mod.append y = c_s + g_s ' Determination of employment sim_mod.append n_d = y/w ' End of model ' Select the baseline scenario sim_mod.scenario baseline ' Solve the model for the current sample sim_mod.solve ' Create variables for (simulated) changes in stocks genr dh_s_0 = h_s_0 - h_s_0(-1) genr dh_h_0 = h_h_0 - h_h_0(-1) ' Creates tables and charts from simulated variables ' Create Table 3.4 in the book from simulated values table(13, 5) table3_4 table3_4(1,1) = "Table 3.4: The impact of $20 of government expenditure" table3_4(3,1) = "Period" setcell(table3_4, 3, 2, "1", "c") setcell(table3_4, 3, 3, "2", "c") setcell(table3_4, 3, 4, "3", "c") setcell(table3_4, 3, 5, "n", "c") setcell(table3_4,5,1,"G", "l") setcell(table3_4, 6,1, "Y = G + C", "l") setcell(table3_4, 7,1, "T = theta.Y", "l") setcell(table3_4, 8,1, "YD = Y - T", "l") setcell(table3_4, 9,1, "C = alpha1.YD+alpha2.H(-1)", "l") setcell(table3_4, 10,1, "dHs = G - T", "l") setcell(table3_4, 11,1, "dHh = YD - C", "l") setcell(table3_4, 12,1, "H = dH + H(-1)", "l") table3_4.setmerge(a1:e1) table3_4.setwidth(1) 25 table3_4.setwidth(2:5) 6 table3_4.setlines(a4:e4) +d !countvar = 0 for %var g_d y_0 t_d_0 yd_0 c_d_0 dh_s_0 dh_h_0 h_h_0 !countvar=!countvar+1 !count=0 for %year 1959 1960 1961 2010 !count = !count+1 setcell(table3_4,4+!countvar,1+!count,@elem({%var}, %year), 0) next next show table3_4 ' Creates the chart in Figure 3.2 smpl 1957 2001 graph fig3_2.line yd_0 c_d_0 fig3_2.setelem(1) lcolor(red) lwidth(2) lpat(2) fig3_2.setelem(2) lcolor(green) lwidth(2) lpat(3) fig3_2.name(1) Income YD fig3_2.name(2) Consumption C fig3_2.addtext(t) Figure 3.2: YD and C starting from scratch (table 3.4) fig3_2.draw(line, left) 80 show fig3_2 ' Creates the chart in Figure 3.3 smpl 1957 2001 graph fig3_3.line h_h_0 d(h_h_0) fig3_3.setelem(1) lcolor(blue) lwidth(2) lpat(1) fig3_3.setelem(2) lcolor(red) lwidth(2) lpat(3) fig3_3.setelem(1) axis(right) fig3_3.name(1) Wealth level H (money stock) fig3_3.name(2) Household saving (the change in money stock) fig3_3.addtext(t) Figure 3.3: Wealth level and wealth change, starting from scratch (table 3.4) fig3_3.scale(left) linear range(0, 13) overlap fig3_3.scale(right) linear range(0, 80) overlap show fig3_3
Model SIMEX introduces expectations on households disposable income. There are two versions of model SIMEX used in the book, based on different assumptions on expectations formation.
Version A of the program will generate model SIMEX, with expected disposable income equal to disposable income in the last period, to obtain results in table 3.6 and figure 3.5 in the book.
Download: gl03simex_a (Eviews 5 to 8) or gl03simex_a_v4 (Eviews 4.1)
Version B of the program will generate model SIM, assuming that expectations on disposable income are fixed, to obtain results in figures 3.6 and 3.7.
Download: gl03simex_b (Eviews 5 to 8) gl03simex_b_v4 (Eviews 4.1)