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Filtering by: Creator Kehoe, Timothy Jerome, 1953- Remove constraint Creator: Kehoe, Timothy Jerome, 1953- Series Quarterly review (Federal Reserve Bank of Minneapolis. Research Department) Remove constraint Series: Quarterly review (Federal Reserve Bank of Minneapolis. Research Department)

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  • R207tp578?file=thumbnail
    Creator: Kehoe, Patrick J. and Kehoe, Timothy Jerome, 1953-
    Series: Quarterly review (Federal Reserve Bank of Minneapolis. Research Department)
    Number: Vol. 18, No. 2
    Abstract:

    In this paper, we describe and analyze the basic structure of the applied general equilibrium (AGE) models used to assess the effects of government trade policies. Once we have constructed the basic model, we extend it to cover features such as increasing returns to scale, imperfect competition, and differentiated products, following the AGE modeling trend of the past 10 years. We then compare a static AGE model's predictions with the actual data on how Spain was affected by entering the European Community and find that, when exogenous effects are included, a static AGE model's predictions are fairly accurate.

  • Tx31qh83m?file=thumbnail
    Creator: Kehoe, Patrick J. and Kehoe, Timothy Jerome, 1953-
    Series: Quarterly review (Federal Reserve Bank of Minneapolis. Research Department)
    Number: Vol. 18, No. 2
    Abstract:

    We examine the results of four static applied general equilibrium (AGE) modeling teams' analyses of the effects of NAFTA. What they show is that Mexico's economy, because it's the smallest, will see the biggest NAFTA-produced increase in economic welfare: from 2 to 5 percent of GDP. The U.S. welfare increase will be small, around 0.1 percent of GDP; Canada will notice no welfare increase due to NAFTA. We then discuss two examples of dynamic phenomena—labor force adjustment and capital flows—which are likely to influence NAFTA's welfare impact, but that aren't easy to incorporate into static AGE models. Early results indicate that this is an important direction for future study.

  • 4f16c2963?file=thumbnail
    Creator: Bergoeing, Raphael, Kehoe, Patrick J., Kehoe, Timothy Jerome, 1953-, and Soto, Raimundo
    Series: Quarterly review (Federal Reserve Bank of Minneapolis. Research Department)
    Number: Vol. 26, No. 1
    Abstract:

    Both Chile and Mexico experienced severe economic crises in the early 1980s, yet Chile recovered much faster than Mexico. This study analyzes four possible explanations for this difference and rules out three, explanations based on money supply expansion, real wage and real exchange rate declines, and foreign debt overhangs. The fourth explanation is based on government policy reforms in the two countries. Using growth accounting and a calibrated growth model, the study determines that the only policy reforms promising as explanations are those that primarily affect total factor productivity, or how inputs are used, not the inputs themselves. Interpreting historical evidence with economic theory, the study concludes that the crucial difference between Chile and Mexico in the 1980s and 1990s is earlier government policy reforms in Chile, particularly reforms in policies affecting the banking system and bankruptcy procedures.

  • Cr56n110z?file=thumbnail
    Creator: Conesa, Juan Carlos, Kehoe, Timothy Jerome, 1953-, and Ruhl, Kim J.
    Series: Quarterly review (Federal Reserve Bank of Minneapolis. Research Department)
    Number: Vol. 31, No. 1
    Abstract:

    This article is a primer on the great depressions methodology developed by Cole and Ohanian (1999, 2007) and Kehoe and Prescott (2002, 2007). We use growth accounting and simple dynamic general equilibrium models to study the depression that occurred in Finland in the early 1990s. We find that the sharp drop in real GDP over the period 1990–93 was driven by a combination of a drop in total factor productivity (TFP) during 1990–92 and of increases in taxes on labor and consumption and increases in government consumption during 1989–94, which drove down hours worked in Finland. We attempt to endogenize the drop in TFP in variants of the model with an investment sector and with terms-of-trade shocks but are unsuccessful.