Pub Date : 2025-09-01DOI: 10.1016/j.jpolmod.2025.05.002
Idris A. Adediran , Olajide O. Oyadeyi , Tirimisiyu F. Oloko
We observe a disquieting problem: the ineffectiveness of conventional monetary policy instruments, including inflation targeting, to deliver price stability in high-inflation environments. We explore two exciting contributions using an intuitive panel data econometric modelling across M1 2010 and M12 2023. First, we highlight the key drivers of inflation in the countries as mostly non-monetary factors–geopolitical risk, fiscal spending, and inflation expectation–to explain why price stability eludes the monetary authorities. Second, we estimate monetary and fiscal policy rules and find that while price stability remains the overarching goal of monetary policy, the fiscal authorities appear unconcerned despite contributing to the problem. We propose a policy coordination strategy that integrates inflation targeting into both monetary and fiscal policy rules, as well as supply-side initiatives.
{"title":"Inflation and policy coordination in high-inflation environments","authors":"Idris A. Adediran , Olajide O. Oyadeyi , Tirimisiyu F. Oloko","doi":"10.1016/j.jpolmod.2025.05.002","DOIUrl":"10.1016/j.jpolmod.2025.05.002","url":null,"abstract":"<div><div><span><span>We observe a disquieting problem: the ineffectiveness of conventional monetary policy instruments, including </span>inflation targeting, to deliver price stability in high-inflation environments. We explore two exciting contributions using an intuitive panel data </span>econometric modelling across M1 2010 and M12 2023. First, we highlight the key drivers of inflation in the countries as mostly non-monetary factors–geopolitical risk, fiscal spending, and inflation expectation–to explain why price stability eludes the monetary authorities. Second, we estimate monetary and fiscal policy rules and find that while price stability remains the overarching goal of monetary policy, the fiscal authorities appear unconcerned despite contributing to the problem. We propose a policy coordination strategy that integrates inflation targeting into both monetary and fiscal policy rules, as well as supply-side initiatives.</div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 5","pages":"Pages 889-902"},"PeriodicalIF":3.1,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144997765","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01DOI: 10.1016/j.jpolmod.2025.03.003
Michael Funke , Raphael Terasa
As an incentive towards twin digital and green investment in the corporate landscape, the German Federal Government has suggested a targeted temporary super depreciation allowance to support much-needed green and digital transitions. Using a calibrated multi-sector DSGE model, we find that the temporary super deduction could trigger an uplift of 10 percentage points for crucial green and digital capital spending, turbo-charging decarbonization and digitization ambitions. However, with the temporary corporate tax policy measure set to end after two years, there is a risk that the higher investment expenditures are levelling out afterwards.
{"title":"Will temporary super depreciation allowances for green and digital investments have knock-on effects?","authors":"Michael Funke , Raphael Terasa","doi":"10.1016/j.jpolmod.2025.03.003","DOIUrl":"10.1016/j.jpolmod.2025.03.003","url":null,"abstract":"<div><div><span>As an incentive towards twin digital and green investment in the corporate landscape, the German Federal Government has suggested a targeted temporary super depreciation allowance to support much-needed green and digital transitions. Using a calibrated multi-sector </span>DSGE<span><span> model, we find that the temporary super deduction could trigger an uplift of 10 percentage points for crucial green and digital capital spending, turbo-charging decarbonization and digitization ambitions. However, with the temporary </span>corporate tax policy measure set to end after two years, there is a risk that the higher investment expenditures are levelling out afterwards.</span></div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 5","pages":"Pages 977-998"},"PeriodicalIF":3.1,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144997778","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01DOI: 10.1016/j.jpolmod.2024.09.001
Nidhi Kaicker
The study assesses the impact of the Covid-19 pandemic on household consumption of alcohol in India, considering both income shocks and supply-side factors. based on a nationally representative household survey conducted by CMIE. Using a 2SLS panel regression model and employing an approach akin to difference-in-differences technique, our study finds that the pandemic induced lockdowns resulted in a sharp increase in the share of alcohol in total expenditure across rural and urban India, and for all income levels. Alcohol consumption varies by education level, by caste, religion, and severity of income shocks. The increased alcohol consumption during the pandemic, and more so among the households that faced a severe income shock, despite the supply restrictions, suggest the stronger impact of stress-response-dampening hypothesis and self-medication hypothesis compared to the income effect. Despite state-imposed supply restrictions, including temporary alcohol shop closures and subsequent reopening with higher taxes, the study raises concerns about a disproportionate rise in alcohol consumption among the most economically impacted. This underscores the need for balanced policy responses, considering both economic stressors and public health imperatives, and emphasizes targeted interventions to mitigate the consequences of increased alcohol consumption during crises.
{"title":"Alcohol consumption response to pandemic induced income shocks in India","authors":"Nidhi Kaicker","doi":"10.1016/j.jpolmod.2024.09.001","DOIUrl":"10.1016/j.jpolmod.2024.09.001","url":null,"abstract":"<div><div>The study assesses the impact of the Covid-19 pandemic on household consumption of alcohol in India<span><span>, considering both income shocks and supply-side factors. based on a nationally representative household survey conducted by CMIE. Using a 2SLS panel regression model and employing an approach akin to difference-in-differences technique, our study finds that the pandemic induced lockdowns<span> resulted in a sharp increase in the share of alcohol in total expenditure across rural and urban India, and for all income levels. Alcohol consumption varies by education level, by caste, religion, and severity of income shocks. The increased alcohol consumption during the pandemic, and more so among the households that faced a severe income shock, despite the supply restrictions, suggest the stronger impact of stress-response-dampening hypothesis and self-medication hypothesis compared to the income effect. Despite state-imposed supply restrictions, including temporary alcohol shop closures and subsequent reopening with higher </span></span>taxes, the study raises concerns about a disproportionate rise in alcohol consumption among the most economically impacted. This underscores the need for balanced policy responses, considering both economic stressors and public health imperatives, and emphasizes targeted interventions to mitigate the consequences of increased alcohol consumption during crises.</span></div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 5","pages":"Pages 1021-1036"},"PeriodicalIF":3.1,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144997780","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01DOI: 10.1016/j.jpolmod.2025.06.005
Muhammad Arshad Khan , Abdul Rahman , Bashir Ahmed Tareen
Historically, Pakistan remained heavily dependent on domestic and external sources of financing which have strangled economic activities. Excessive public borrowing from domestic sources puts upward pressure on interest rates which crowded out domestic investment. Earlier studies found a linear relationship between debt and private investment. However, these studies overlooked the non-linear behavior of debt. The present study fills the research gap by examining the asymmetric impact of domestic and external debt on private investment. Further, this study attempts to explore whether the domestic and foreign debt crowed-in or crowed-out private investment in Pakistan over the period from 1972 to 2022. To this end, the Non-linear Autoregressive Distributed Lag (NARDL) model has been utilized to capture the positive and negative shocks of domestic and foreign debt on private investment. The empirical outcome confirms the existence of both the long-run and short-run asymmetry between private investment, domestic debt, and external debt in Pakistan. Particularly, the positive shock to domestic debt deters private investment, while the negative shock promotes private investment in the short run. On the other hand, a positive shock to foreign debt enhances private investment in the short-run and the opposite holds for the negative shocks in the long-run. Another important finding is the crowding-out effect of public investment on private investment, which holds true in the short run. Thus, there is a need to curtail the size of domestic debt since its accumulation adversely affects private investment.
{"title":"Is Pakistan in a debt trap? Do domestic and foreign debts crowd-out private investment?","authors":"Muhammad Arshad Khan , Abdul Rahman , Bashir Ahmed Tareen","doi":"10.1016/j.jpolmod.2025.06.005","DOIUrl":"10.1016/j.jpolmod.2025.06.005","url":null,"abstract":"<div><div>Historically, Pakistan remained heavily dependent on domestic and external sources of financing which have strangled economic activities. Excessive public borrowing from domestic sources puts upward pressure on interest rates which crowded out domestic investment. Earlier studies found a linear relationship between debt and private investment. However, these studies overlooked the non-linear behavior of debt. The present study fills the research gap by examining the asymmetric impact of domestic and external debt on private investment. Further, this study attempts to explore whether the domestic and foreign debt crowed-in or crowed-out private investment in Pakistan over the period from 1972 to 2022. To this end, the Non-linear Autoregressive Distributed Lag (NARDL) model has been utilized to capture the positive and negative shocks of domestic and foreign debt on private investment. The empirical outcome confirms the existence of both the long-run and short-run asymmetry between private investment, domestic debt, and external debt in Pakistan. Particularly, the positive shock to domestic debt deters private investment, while the negative shock promotes private investment in the short run. On the other hand, a positive shock to foreign debt enhances private investment in the short-run and the opposite holds for the negative shocks in the long-run. Another important finding is the crowding-out effect of public investment on private investment, which holds true in the short run. Thus, there is a need to curtail the size of domestic debt since its accumulation adversely affects private investment.</div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 5","pages":"Pages 1076-1096"},"PeriodicalIF":3.1,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144997783","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-28DOI: 10.1016/j.jpolmod.2025.07.007
Robin Argueyrolles
Despite the literature on fossil fuel subsidies broadly supporting a phase-out, the influence of market power on shaping policy outcomes remains uncertain. This is surprising given the influence of OPEC and the presence of economies of scale in the oil sector, which has historically been one of the largest recipients of fossil fuel subsidies. A Computable General Equilibrium (CGE) model that allows for variable endogenous markups and increasing returns is developed to compare the impact of reforms under different market structures. Results show that market power weakens the effectiveness of reforms when implemented by large net exporters such as OPEC, but leads to larger reductions in global oil consumption when carried out by the rest of the world. The article suggests that reforms should be led by net oil-importing and non-OPEC+ countries, rather than attempting to achieve a “UAE consensus” in climate coalitions.
{"title":"Market power and fossil fuel subsidy reforms: Who should lead the call for change?","authors":"Robin Argueyrolles","doi":"10.1016/j.jpolmod.2025.07.007","DOIUrl":"10.1016/j.jpolmod.2025.07.007","url":null,"abstract":"<div><div>Despite the literature on fossil fuel subsidies broadly supporting a phase-out, the influence of market power on shaping policy outcomes remains uncertain. This is surprising given the influence of OPEC and the presence of economies of scale in the oil sector, which has historically been one of the largest recipients of fossil fuel subsidies. A Computable General Equilibrium (CGE) model that allows for variable endogenous markups and increasing returns is developed to compare the impact of reforms under different market structures. Results show that market power weakens the effectiveness of reforms when implemented by large net exporters such as OPEC, but leads to larger reductions in global oil consumption when carried out by the rest of the world. The article suggests that reforms should be led by net oil-importing and non-OPEC+ countries, rather than attempting to achieve a “UAE consensus” in climate coalitions.</div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 6","pages":"Pages 1113-1130"},"PeriodicalIF":3.1,"publicationDate":"2025-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145384376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-09DOI: 10.1016/j.jpolmod.2025.07.006
Dennis Nchor, Petr Rozmahel
Studies of economic growth convergence have focused on developed countries with less emphasis on developing countries. We therefore seek to contribute to filling that missing gap by assessing whether the 15 West African countries are converging or catching up with the developed or advanced countries. First, we explored conditional and unconditional beta convergence and secondly, we examined sigma convergence using the mean log deviation and the average GDP per capita relative to the richer USA. We found no evidence of unconditional convergence or sigma convergence between the West African countries and the USA. However, we found evidence of conditional convergence between the two given no variation in structural growth factors. For instance, controlling for investment and population growth, it will take 89 years to cut the gap between the West African countries and the USA into half. Controlling for investment, population growth and human capital accumulation rate, the number of years to cut the gap into half reduces to 78 whereas adding FDI and trade openness increases the speed of convergence to 2 % and reduces the number of years for halving the gap to 35.
{"title":"Beta and sigma convergence: Are the 15 West African countries catching up with the developed world?","authors":"Dennis Nchor, Petr Rozmahel","doi":"10.1016/j.jpolmod.2025.07.006","DOIUrl":"10.1016/j.jpolmod.2025.07.006","url":null,"abstract":"<div><div>Studies of economic growth convergence have focused on developed countries with less emphasis on developing countries. We therefore seek to contribute to filling that missing gap by assessing whether the 15 West African countries are converging or catching up with the developed or advanced countries. First, we explored conditional and unconditional beta convergence and secondly, we examined sigma convergence using the mean log deviation and the average GDP per capita relative to the richer USA. We found no evidence of unconditional convergence or sigma convergence between the West African countries and the USA. However, we found evidence of conditional convergence between the two given no variation in structural growth factors. For instance, controlling for investment and population growth, it will take 89 years to cut the gap between the West African countries and the USA into half. Controlling for investment, population growth and human capital accumulation rate, the number of years to cut the gap into half reduces to 78 whereas adding FDI and trade openness increases the speed of convergence to 2 % and reduces the number of years for halving the gap to 35.</div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 6","pages":"Pages 1305-1321"},"PeriodicalIF":3.1,"publicationDate":"2025-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145384385","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-05DOI: 10.1016/j.jpolmod.2025.07.002
David Cronin, Niall McInerney
With a renewed focus on government investment to address infrastructural, defence and decarbonisation objectives in the EU now arising, the behaviour of its share of government spending across the EU14 countries between 1995 and 2023 is assessed. Greater convergence in that investment ratio has occurred over time, mainly reflecting a decline in periphery member states’ ratios during the 2009–2012 economic crisis. Econometric analysis indicates both cyclical and fiscal variables affecting ratio values, with higher debt ratios associated with relatively lower capital expenditure. With new EU fiscal rules, adopted in April 2024, imposing constraints on government expenditure growth, there is a danger that public capital formation could be constrained relative to identified needs.
{"title":"Investment’s share of government spending in the EU14 Since 1995 – convergence or divergence, and why?","authors":"David Cronin, Niall McInerney","doi":"10.1016/j.jpolmod.2025.07.002","DOIUrl":"10.1016/j.jpolmod.2025.07.002","url":null,"abstract":"<div><div>With a renewed focus on government investment to address infrastructural, defence and decarbonisation objectives in the EU now arising, the behaviour of its share of government spending across the EU14 countries between 1995 and 2023 is assessed. Greater convergence in that investment ratio has occurred over time, mainly reflecting a decline in periphery member states’ ratios during the 2009–2012 economic crisis. Econometric analysis indicates both cyclical and fiscal variables affecting ratio values, with higher debt ratios associated with relatively lower capital expenditure. With new EU fiscal rules, adopted in April 2024, imposing constraints on government expenditure growth, there is a danger that public capital formation could be constrained relative to identified needs.</div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 6","pages":"Pages 1284-1304"},"PeriodicalIF":3.1,"publicationDate":"2025-08-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145384384","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-31DOI: 10.1016/j.jpolmod.2025.07.003
Erkan Erdogdu
The transition to low-carbon energy sources presents critical challenges for competitive electricity markets, particularly in developing economies. This study examines the role of nuclear energy in achieving net-zero targets while addressing market inefficiencies and policy gaps. Using Turkiye as a case study, our findings reveal that nuclear power, despite its low-carbon benefits, faces financial and regulatory barriers that hinder its competitiveness. Through an empirically validated policy model, we propose market-compatible instruments, such as Contracts for Difference (CfD) and capacity remuneration mechanisms, to enhance nuclear investment. These insights offer actionable policy solutions to reconcile nuclear energy deployment with market efficiency.
{"title":"The role of nuclear energy in competitive power markets: Policy solutions applied to Turkiye","authors":"Erkan Erdogdu","doi":"10.1016/j.jpolmod.2025.07.003","DOIUrl":"10.1016/j.jpolmod.2025.07.003","url":null,"abstract":"<div><div>The transition to low-carbon energy sources presents critical challenges for competitive electricity markets, particularly in developing economies. This study examines the role of nuclear energy in achieving net-zero targets while addressing market inefficiencies and policy gaps. Using Turkiye as a case study, our findings reveal that nuclear power, despite its low-carbon benefits, faces financial and regulatory barriers that hinder its competitiveness. Through an empirically validated policy model, we propose market-compatible instruments, such as Contracts for Difference (CfD) and capacity remuneration mechanisms, to enhance nuclear investment. These insights offer actionable policy solutions to reconcile nuclear energy deployment with market efficiency.</div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 6","pages":"Pages 1322-1343"},"PeriodicalIF":3.1,"publicationDate":"2025-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145384386","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-01DOI: 10.1016/j.jpolmod.2025.06.009
Barry Eichengreen
{"title":"A tale of debt in three acts","authors":"Barry Eichengreen","doi":"10.1016/j.jpolmod.2025.06.009","DOIUrl":"10.1016/j.jpolmod.2025.06.009","url":null,"abstract":"","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 4","pages":"Pages 738-745"},"PeriodicalIF":3.1,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144863795","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
North America (Canada, US, Mexico) is a highly inter-connected regional economy (ICRE) with extensive cross-country value chains in production and strong trade, financial, and labor market links. The impact of new US deportation policy would affect the US economy in the short to medium term by reducing the labor force by nearly five percent as foreign-born labor leaves the country or drops out of the labor market. Analysis with a global computable general equilibrium (CGE) simulation model indicates that the shock would cause a supply-side recession in the US and reduce real GDP by four percent. The wage in the labor markets with high participation of the remaining undocumented labor would increase, which would provide an incentive for increased future migration. There would also be a decline in the wage of native-born workers; studies indicate that they are complements not substitutes for non-native labor in their sectors of employment. The US macro shock would also induce macro shocks to both Mexico and Canada, yielding reductions in their GDP. In addition, there would be a dramatic decline in remittance flows from foreign-born workers to their countries of origin. For Mexico, the reduction in remittances would lead to a financial shock due to lost foreign exchange, resulting in a major depreciation of the real exchange rate and changes in macro aggregates: lower GDP, lower imports, increased exports, and much lower aggregate final demand. The financial shock in Mexico would feed back to Canada and the US, affecting the sectoral composition of trade and production in both countries. In sum, the impact of US policies to remove foreign-born labor would reverberate across all three countries, damaging their economies and weakening economic integration in North America.
{"title":"The impact of US deportation policies on the US, Canadian, and Mexican economies","authors":"Karen Thierfelder , Sherman Robinson , Raul Hinojosa-Ojeda","doi":"10.1016/j.jpolmod.2025.06.010","DOIUrl":"10.1016/j.jpolmod.2025.06.010","url":null,"abstract":"<div><div>North America (Canada, US, Mexico) is a highly inter-connected regional economy (ICRE) with extensive cross-country value chains in production and strong trade, financial, and labor market<span><span><span> links. The impact of new US deportation policy would affect the US economy in the short to medium term by reducing the labor force by nearly five percent as foreign-born labor leaves the country or drops out of the labor market. Analysis with a global computable general equilibrium<span> (CGE) simulation model indicates that the shock would cause a supply-side recession in the US and reduce real GDP by four percent. The wage in the labor markets with high participation of the remaining undocumented labor would increase, which would provide an incentive for increased future migration. There would also be a decline in the wage of native-born workers; studies indicate that they are complements not substitutes for non-native labor in their sectors of employment. The US macro shock would also induce macro shocks to both Mexico and Canada, yielding reductions in their GDP. In addition, there would be a dramatic decline in </span></span>remittance<span><span> flows from foreign-born workers to their countries of origin. For Mexico, the reduction in remittances would lead to a financial shock due to lost foreign exchange, resulting in a major depreciation of the real exchange rate and changes in </span>macro aggregates: lower GDP, lower imports, increased exports, and much lower aggregate final demand. The financial shock in Mexico would feed back to Canada and the US, affecting the sectoral </span></span>composition of trade<span> and production in both countries. In sum, the impact of US policies to remove foreign-born labor would reverberate across all three countries, damaging their economies and weakening economic integration in North America.</span></span></div></div>","PeriodicalId":48015,"journal":{"name":"Journal of Policy Modeling","volume":"47 4","pages":"Pages 746-767"},"PeriodicalIF":3.1,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144863796","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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