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The effects of a credit crisis: simulations with the USAGE model

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  • Dixon, Peter B.
  • Rimmer, Maureen T.
  • Johnson, Martin
  • Rasmussen, Chris

Abstract

We look at OECD macro forecasts made in November 2007 and November 2008. From this comparison, we deduce what the OECD was anticipating for the effects of the 2008 U.S. credit crisis on GDP in 2009-11. We reproduce the OECD-implied GDP effects in the USAGE model by imposing appropriate credit shortages. In this way, we use the CGE framework to fill out the industry, employment and trade implications of the credit crisis. The simulations show real devaluation of the U.S. currency and stimulation of trade-exposed industries. However, the U.S. currency remains strong. This leaves us with a modeling challenge: how to conduct a simulation in which there is a sharp reduction in investment but no real depreciation.

Suggested Citation

  • Dixon, Peter B. & Rimmer, Maureen T. & Johnson, Martin & Rasmussen, Chris, 2009. "The effects of a credit crisis: simulations with the USAGE model," Conference papers 331861, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331861
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    References listed on IDEAS

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    1. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Trade liberalization, poverty and efficient equity," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 11, pages 255-286, World Scientific Publishing Co. Pte. Ltd..
    2. Docquier,Frederic & Marfouk,Abdeslam, 2004. "Measuring the international mobility of skilled workers (1990-2000) : release 1.0," Policy Research Working Paper Series 3381, The World Bank.
    3. Guenter Lang, 2000. "Native-Immigrant Wage Differentials in Germany - Assimilation, Discrimination, or Human Capital?," Discussion Paper Series 197, Universitaet Augsburg, Institute for Economics.
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