RDP 7903: Monetary Rules: A Preliminary Analysis Appendix D

P.D. Jonson and R.G. Trevor

September 1979

Figure 1: Increase in Real Government Spending
Figure 1: Increase in Real Government Spending
Figure 2: Increase in Real Exports
Figure 2: Increase in Real Exports
Figure 3: Increase in Household Saving Ratio
Figure 3: Increase in Household Saving Ratio
Figure 4: Decrease in Business Fixed Investment
Figure 4: Decrease in Business Fixed Investment
Figure 5: Increase in Real Award Wages
Figure 5: Increase in Real Award Wages
Figure 6: Reduction in Capacity Output
Figure 6: Reduction in Capacity Output
Figure 7: Increase in World Prices
Figure 7: Increase in World Prices
Figure 8: Increase in Capital Inflow
Figure 8: Increase in Capital Inflow
Figure 9: Decrease in Demand for Money
Figure 9: Decrease in Demand for Money
PERMANENT EFFECTS OF THE IMPULSES*
  Output Capital Employment Labour Supply Unemployment Rate Wages Prices Money International Reserves Bond Rate Exchange Rate
Increase in govt spending 0.1 −4.2 0.8 0.6 −.27 5.1 5.3 −0.4 −6.7 1.3 4.3
Increase in exports 1.8 2.0 0.9 0.7 −.26 −0.5 −1.6 −1.8 3.9 – −6.8
Increase in savings ratio −0.2 5.7 −1.4 −0.9 .44 7.4 7.3 17.1 31.2 −2.5 7.4
Decrease in investment – – – – – – – – – – –
Increase in award wages 0.7 4.8 −1.0 −0.6 .34 4.5 2.8 8.2 16.7 −1.7 3.7
Decrease in capacity output −2.2 −5.0 0.9 0.6 −.32 0.2 2.5 −5.0 −8.4 1.1 −0.2
Increase in world prices – – – – – – – – – – −4.9
Decrease in money demand – 0.3 – – – 0.9 0.8 −1.8 −1.1 −0.1 0.7
Increase in capital inflow 0.2 1.2 – – – 1.0 0.7 2.1 5.0 −0.4 –

* Percentage deviation from steady state levels, except in case of bond rate (deviation from steady state level) and unemployment rate (deviation from assumed steady state level of 2 per cent).