' Before running this program you should have run REFORM2 (reform2_steady_state.txt)

' to create a workfile and a steady state solution / baseline scenario (Scenario _0)!



' Copy-paste all this text to EViews and run it as a program



' This program will generate four scenarios for money creation under full-reserve banking.



'Scenario _1 = Money creation through government spending

'Scenario _2 = Money creation through tax reduction

'Scenario _3 = Money creation through citizen's dividend

'Scenario _4 = Money creation through repaying government debt (quantitative easing)





smpl @all



' Store original values of shocked variables

genr b_cb_bar_0 = b_cb_bar

genr g_k_0 = g_k

genr tau_0 = tau

genr div_citizen_0 = div_citizen







'***SCENARIO 1 (Money creation through government spending)***



' Increase the money supply and govt spending

smpl 0015 @last

b_cb_bar = 65

g_k = g_k_0 + 15/p



'Return govt spending to its previous value after one period

smpl 0016 @last

g_k = g_k_0



smpl @all



' Select the alternative Scenario

reform_mod.scenario "Scenario 1"



' Set simulation sample

smpl 0003 @last



' Solve the model for the current sample

reform_mod.solve(i=p)



' Store new values of shocked variables

genr b_cb_bar_1 = b_cb_bar

genr g_k_1 = g_k



' Return shocked variables to their original values

b_cb_bar = b_cb_bar_0

g_k = g_k_0



' end of scenario





' Create charts for simulated variables



smpl 0001 0050



' GDP and inflation

graph fig_y_k_1 y_k_1

fig_y_k_1.draw(shade, bottom) 0014 0035

fig_y_k_1.datelabel format(yy)

fig_y_k_1.addtext(b) Period

fig_y_k_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_y_k_1.addtext(2, 0.1, font(b)) Transition

fig_y_k_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_y_k_1.addtext(t,just(c),just(c), font(14)) Real GDP



graph fig_pi_1 pi_1

fig_pi_1.axis(left) units(p)

fig_pi_1.addtext(-0.2, -0.3) %

fig_pi_1.draw(shade, bottom) 0014 0035

fig_pi_1.datelabel format(yy)

fig_pi_1.addtext(b) Period

fig_pi_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_pi_1.addtext(2, 0.1, font(b)) Transition

fig_pi_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_pi_1.addtext(t,just(c),just(c), font(14)) Inflation rate



' Monetary and credit aggregates

graph fig_h_hh_1 h_hh_1

fig_h_hh_1.draw(shade, bottom) 0014 0035

fig_h_hh_1.datelabel format(yy)

fig_h_hh_1.addtext(b) Period

fig_h_hh_1.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_h_hh_1.addtext(2, 2.8, font(b)) Transition

fig_h_hh_1.addtext(3.6, 2.8, font(b)) "New" steady state

fig_h_hh_1.addtext(t,just(c),just(c), font(14)) Cash



graph fig_m1_h_1 m1_h_1

fig_m1_h_1.draw(shade, bottom) 0014 0035

fig_m1_h_1.datelabel format(yy)

fig_m1_h_1.addtext(b) Period

fig_m1_h_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m1_h_1.addtext(2, 0.1, font(b)) Transition

fig_m1_h_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m1_h_1.addtext(t,just(c),just(c), font(14)) Demand deposits



graph fig_m2_h_1 m2_h_1

fig_m2_h_1.draw(shade, bottom) 0014 0035

fig_m2_h_1.datelabel format(yy)

fig_m2_h_1.addtext(b) Period

fig_m2_h_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m2_h_1.addtext(2, 0.1, font(b)) Transition

fig_m2_h_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m2_h_1.addtext(t,just(c),just(c), font(14)) Time deposits



graph fig_l_s_1 l_s_1

fig_l_s_1.draw(shade, bottom) 0014 0035

fig_l_s_1.datelabel format(yy)

fig_l_s_1.addtext(b) Period

fig_l_s_1.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_l_s_1.addtext(2, 2.8, font(b)) Transition

fig_l_s_1.addtext(3.6, 2.8, font(b)) "New" steady state

fig_l_s_1.addtext(t,just(c),just(c), font(14)) Loans



' Bank liquidity and deposit and loan rates

graph fig_blr_1 blr_1 blr_bot blr_top

fig_blr_1.options linepat

fig_blr_1.setelem(2) lpat(dash1)

fig_blr_1.setelem(3) lpat(dash1)

fig_blr_1.draw(shade, bottom) 0014 0035

fig_blr_1.datelabel format(yy)

fig_blr_1.addtext(b) Period

fig_blr_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_blr_1.addtext(2, 0.1, font(b)) Transition

fig_blr_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_blr_1.addtext(t,just(c),just(c), font(14)) Bank liquidity ratio



graph fig_r_m_1 r_m_1

fig_r_m_1.axis(left) units(p)

fig_r_m_1.addtext(-0.3, -0.3) %

fig_r_m_1.draw(shade, bottom) 0014 0035

fig_r_m_1.datelabel format(yy)

fig_r_m_1.addtext(b) Period

fig_r_m_1.addtext(0.05, 1.5, font(b)) "Old" steady state

fig_r_m_1.addtext(2, 1.5, font(b)) Transition

fig_r_m_1.addtext(3.6, 1.5, font(b)) "New" steady state

fig_r_m_1.addtext(t,just(c),just(c), font(14)) Interest rate on time deposits



graph fig_r_l_1 r_l_1

fig_r_l_1.axis(left) units(p)

fig_r_l_1.addtext(-0.3, -0.3) %

fig_r_l_1.draw(shade, bottom) 0014 0035

fig_r_l_1.datelabel format(yy)

fig_r_l_1.addtext(b) Period

fig_r_l_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_r_l_1.addtext(2, 0.1, font(b)) Transition

fig_r_l_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_r_l_1.addtext(t,just(c),just(c), font(14)) Interest rate on loans



' Bills held by hh and psbr

graph fig_b_hh_1 b_hh_1

fig_b_hh_1.draw(shade, bottom) 0014 0035

fig_b_hh_1.datelabel format(yy)

fig_b_hh_1.addtext(b) Period

fig_b_hh_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_b_hh_1.addtext(2, 0.1, font(b)) Transition

fig_b_hh_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_b_hh_1.addtext(t,just(c),just(c), font(14)) Government bills held by households



graph fig_r_b_1 r_b_1

fig_r_b_1.axis(left) units(p)

fig_r_b_1.addtext(-0.25, -0.3) %

fig_r_b_1.draw(shade, bottom) 0014 0035

fig_r_b_1.datelabel format(yy)

fig_r_b_1.addtext(b) Period

fig_r_b_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_r_b_1.addtext(2, 0.1, font(b)) Transition

fig_r_b_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_r_b_1.addtext(t,just(c),just(c), font(14)) Interest rate on government bills (main rate)



graph fig_psbr_1 psbr_1

fig_psbr_1.draw(shade, bottom) 0014 0035

fig_psbr_1.datelabel format(yy)

fig_psbr_1.addtext(b) Period

fig_psbr_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_psbr_1.addtext(2, 0.1, font(b)) Transition

fig_psbr_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_psbr_1.addtext(t,just(c),just(c), font(14)) Government budget deficit



' Private wealth

graph fig_v_1 v_1

fig_v_1.draw(shade, bottom) 0014 0035

fig_v_1.datelabel format(yy)

fig_v_1.addtext(b) Period

fig_v_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_v_1.addtext(2, 0.1, font(b)) Transition

fig_v_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_v_1.addtext(t,just(c),just(c), font(14)) Wealth of households



' Public debt

graph fig_gd_per_y_1 gd_1/y_1 gd_net_1/y_1

fig_gd_per_y_1.name(1) Gross government debt

fig_gd_per_y_1.name(2) Consolidated government debt

fig_gd_per_y_1.options linepat

fig_gd_per_y_1.setelem(2) lpat(dash2)

fig_gd_per_y_1.axis(left) units(p)

fig_gd_per_y_1.addtext(-0.4, -0.3) % of GDP

fig_gd_per_y_1.draw(shade, bottom) 0014 0035

fig_gd_per_y_1.datelabel format(yy)

fig_gd_per_y_1.addtext(b) Period

fig_gd_per_y_1.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_gd_per_y_1.addtext(2, 0.1, font(b)) Transition

fig_gd_per_y_1.addtext(3.6, 0.1, font(b)) "New" steady state

fig_gd_per_y_1.addtext(t,just(c),just(c), font(14)) Government debt







'***SCENARIO 2 (Money creation through tax reduction)***



' Increase the money supply and reduce tax rate (so that taxes collected fall by 15)

smpl 0015 @last

b_cb_bar = 65

tau = 0.157



'Return taxes to its previous value after one period

smpl 0016 @last

tau = tau_0



smpl @all



' Select the alternative Scenario

reform_mod.scenario(n, a="_2") "Scenario 2"



' Set simulation sample

smpl 0003 @last



' Solve the model for the current sample

reform_mod.solve(i=p)



' Store new values of shocked variables

genr b_cb_bar_2 = b_cb_bar

genr tau_2 = tau



' Return shocked variables to their original values

b_cb_bar = b_cb_bar_0

tau = tau_0



' end of scenario





' Create charts for simulated variables



smpl 0001 0050



' GDP and inflation

graph fig_y_k_2 y_k_2

fig_y_k_2.draw(shade, bottom) 0014 0035

fig_y_k_2.datelabel format(yy)

fig_y_k_2.addtext(b) Period

fig_y_k_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_y_k_2.addtext(2, 0.1, font(b)) Transition

fig_y_k_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_y_k_2.addtext(t,just(c),just(c), font(14)) Real GDP



graph fig_pi_2 pi_2

fig_pi_2.axis(left) units(p)

fig_pi_2.addtext(-0.2, -0.3) %

fig_pi_2.draw(shade, bottom) 0014 0035

fig_pi_2.datelabel format(yy)

fig_pi_2.addtext(b) Period

fig_pi_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_pi_2.addtext(2, 0.1, font(b)) Transition

fig_pi_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_pi_2.addtext(t,just(c),just(c), font(14)) Inflation rate



' Demand deposits, time deposits and loans

graph fig_m1_h_2 m1_h_2

fig_m1_h_2.draw(shade, bottom) 0014 0035

fig_m1_h_2.datelabel format(yy)

fig_m1_h_2.addtext(b) Period

fig_m1_h_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m1_h_2.addtext(2, 0.1, font(b)) Transition

fig_m1_h_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m1_h_2.addtext(t,just(c),just(c), font(14)) Demand deposits



graph fig_m2_h_2 m2_h_2

fig_m2_h_2.draw(shade, bottom) 0014 0035

fig_m2_h_2.datelabel format(yy)

fig_m2_h_2.addtext(b) Period

fig_m2_h_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m2_h_2.addtext(2, 0.1, font(b)) Transition

fig_m2_h_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m2_h_2.addtext(t,just(c),just(c), font(14)) Time deposits



graph fig_l_s_2 l_s_2

fig_l_s_2.draw(shade, bottom) 0014 0035

fig_l_s_2.datelabel format(yy)

fig_l_s_2.addtext(b) Period

fig_l_s_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_l_s_2.addtext(2, 0.1, font(b)) Transition

fig_l_s_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_l_s_2.addtext(t,just(c),just(c), font(14)) Loans



' Bank liquidity and deposit and loan rates

graph fig_blr_2 blr_2 blr_bot blr_top

fig_blr_2.options linepat

fig_blr_2.setelem(2) lpat(dash1)

fig_blr_2.setelem(3) lpat(dash1)

fig_blr_2.draw(shade, bottom) 0014 0035

fig_blr_2.datelabel format(yy)

fig_blr_2.addtext(b) Period

fig_blr_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_blr_2.addtext(2, 0.1, font(b)) Transition

fig_blr_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_blr_2.addtext(t,just(c),just(c), font(14)) Bank liquidity ratio



graph fig_r_m_2 r_m_2

fig_r_m_2.axis(left) units(p)

fig_r_m_2.addtext(-0.3, -0.3) %

fig_r_m_2.draw(shade, bottom) 0014 0035

fig_r_m_2.datelabel format(yy)

fig_r_m_2.addtext(b) Period

fig_r_m_2.addtext(0.05, 1.5, font(b)) "Old" steady state

fig_r_m_2.addtext(2, 1.5, font(b)) Transition

fig_r_m_2.addtext(3.6, 1.5, font(b)) "New" steady state

fig_r_m_2.addtext(t,just(c),just(c), font(14)) Interest rate on time deposits



graph fig_r_l_2 r_l_2

fig_r_l_2.axis(left) units(p)

fig_r_l_2.addtext(-0.3, -0.3) %

fig_r_l_2.draw(shade, bottom) 0014 0035

fig_r_l_2.datelabel format(yy)

fig_r_l_2.addtext(b) Period

fig_r_l_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_r_l_2.addtext(2, 0.1, font(b)) Transition

fig_r_l_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_r_l_2.addtext(t,just(c),just(c), font(14)) Interest rate on loans



' Bills held by hh and psbr

graph fig_b_hh_2 b_hh_2

fig_b_hh_2.draw(shade, bottom) 0014 0035

fig_b_hh_2.datelabel format(yy)

fig_b_hh_2.addtext(b) Period

fig_b_hh_2.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_b_hh_2.addtext(2, 2.8, font(b)) Transition

fig_b_hh_2.addtext(3.6, 2.8, font(b)) "New" steady state

fig_b_hh_2.addtext(t,just(c),just(c), font(14)) Government bills held by households



graph fig_r_b_2 r_b_2

fig_r_b_2.axis(left) units(p)

fig_r_b_2.addtext(-0.25, -0.3) %

fig_r_b_2.draw(shade, bottom) 0014 0035

fig_r_b_2.datelabel format(yy)

fig_r_b_2.addtext(b) Period

fig_r_b_2.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_r_b_2.addtext(2, 2.8, font(b)) Transition

fig_r_b_2.addtext(3.6, 2.8, font(b)) "New" steady state

fig_r_b_2.addtext(t,just(c),just(c), font(14)) Interest rate on government bills (base rate)



graph fig_psbr_2 psbr_2

fig_psbr_2.draw(shade, bottom) 0014 0035

fig_psbr_2.datelabel format(yy)

fig_psbr_2.addtext(b) Period

fig_psbr_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_psbr_2.addtext(2, 0.1, font(b)) Transition

fig_psbr_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_psbr_2.addtext(t,just(c),just(c), font(14)) Government budget deficit



' Private wealth

graph fig_v_2 v_2

fig_v_2.draw(shade, bottom) 0014 0035

fig_v_2.datelabel format(yy)

fig_v_2.addtext(b) Period

fig_v_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_v_2.addtext(2, 0.1, font(b)) Transition

fig_v_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_v_2.addtext(t,just(c),just(c), font(14)) Wealth of households



' Public debt

graph fig_gd_per_y_2 gd_2/y_2 gd_net_2/y_2

fig_gd_per_y_2.name(1) Gross government debt

fig_gd_per_y_2.name(2) Consolidated government debt

fig_gd_per_y_2.options linepat

fig_gd_per_y_2.setelem(2) lpat(dash2)

fig_gd_per_y_2.axis(left) units(p)

fig_gd_per_y_2.addtext(-0.4, -0.3) % of GDP

fig_gd_per_y_2.draw(shade, bottom) 0014 0035

fig_gd_per_y_2.datelabel format(yy)

fig_gd_per_y_2.addtext(b) Period

fig_gd_per_y_2.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_gd_per_y_2.addtext(2, 0.1, font(b)) Transition

fig_gd_per_y_2.addtext(3.6, 0.1, font(b)) "New" steady state

fig_gd_per_y_2.addtext(t,just(c),just(c), font(14)) Government debt







'***SCENARIO 3 (Money creation through citizen's dividend)***



' Increase the money supply and cash held by households

smpl 0015 @last

b_cb_bar = 65

div_citizen = 15



'Return citizen's dividend to zero after one period

smpl 0016 @last

div_citizen = div_citizen_0



smpl @all



' Select the alternative Scenario

reform_mod.scenario(n, a="_3") "Scenario 3"



' Set simulation sample

smpl 0003 @last



' Solve the model for the current sample

reform_mod.solve(i=p)



' Store new values of shocked variables

genr b_cb_bar_3 = b_cb_bar

genr div_citizen_3 = div_citizen



' Return shocked variables to their original values

b_cb_bar = b_cb_bar_0

div_citizen = div_citizen_0



' end of scenario





' Create charts for simulated variables



smpl 0001 0050



' GDP and inflation

graph fig_y_k_3 y_k_3

fig_y_k_3.draw(shade, bottom) 0014 0035

fig_y_k_3.datelabel format(yy)

fig_y_k_3.addtext(b) Period

fig_y_k_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_y_k_3.addtext(2, 0.1, font(b)) Transition

fig_y_k_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_y_k_3.addtext(t,just(c),just(c), font(14)) Real GDP



graph fig_pi_3 pi_3

fig_pi_3.axis(left) units(p)

fig_pi_3.addtext(-0.2, -0.3) %

fig_pi_3.draw(shade, bottom) 0014 0035

fig_pi_3.datelabel format(yy)

fig_pi_3.addtext(b) Period

fig_pi_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_pi_3.addtext(2, 0.1, font(b)) Transition

fig_pi_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_pi_3.addtext(t,just(c),just(c), font(14)) Inflation rate



' Demand deposits, time deposits and loans

graph fig_m1_h_3 m1_h_3

fig_m1_h_3.draw(shade, bottom) 0014 0035

fig_m1_h_3.datelabel format(yy)

fig_m1_h_3.addtext(b) Period

fig_m1_h_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m1_h_3.addtext(2, 0.1, font(b)) Transition

fig_m1_h_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m1_h_3.addtext(t,just(c),just(c), font(14)) Demand deposits



graph fig_m2_h_3 m2_h_3

fig_m2_h_3.draw(shade, bottom) 0014 0035

fig_m2_h_3.datelabel format(yy)

fig_m2_h_3.addtext(b) Period

fig_m2_h_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m2_h_3.addtext(2, 0.1, font(b)) Transition

fig_m2_h_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m2_h_3.addtext(t,just(c),just(c), font(14)) Time deposits



graph fig_l_s_3 l_s_3

fig_l_s_3.draw(shade, bottom) 0014 0035

fig_l_s_3.datelabel format(yy)

fig_l_s_3.addtext(b) Period

fig_l_s_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_l_s_3.addtext(2, 0.1, font(b)) Transition

fig_l_s_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_l_s_3.addtext(t,just(c),just(c), font(14)) Loans



' Bank liquidity and deposit and loan rates

graph fig_blr_3 blr_3 blr_bot blr_top

fig_blr_3.options linepat

fig_blr_3.setelem(2) lpat(dash1)

fig_blr_3.setelem(3) lpat(dash1)

fig_blr_3.draw(shade, bottom) 0014 0035

fig_blr_3.datelabel format(yy)

fig_blr_3.addtext(b) Period

fig_blr_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_blr_3.addtext(2, 0.1, font(b)) Transition

fig_blr_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_blr_3.addtext(t,just(c),just(c), font(14)) Bank liquidity ratio



graph fig_r_m_3 r_m_3

fig_r_m_3.axis(left) units(p)

fig_r_m_3.addtext(-0.3, -0.3) %

fig_r_m_3.draw(shade, bottom) 0014 0035

fig_r_m_3.datelabel format(yy)

fig_r_m_3.addtext(b) Period

fig_r_m_3.addtext(0.05, 1.5, font(b)) "Old" steady state

fig_r_m_3.addtext(2, 1.5, font(b)) Transition

fig_r_m_3.addtext(3.6, 1.5, font(b)) "New" steady state

fig_r_m_3.addtext(t,just(c),just(c), font(14)) Interest rate on time deposits



graph fig_r_l_3 r_l_3

fig_r_l_3.axis(left) units(p)

fig_r_l_3.addtext(-0.3, -0.3) %

fig_r_l_3.draw(shade, bottom) 0014 0035

fig_r_l_3.datelabel format(yy)

fig_r_l_3.addtext(b) Period

fig_r_l_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_r_l_3.addtext(2, 0.1, font(b)) Transition

fig_r_l_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_r_l_3.addtext(t,just(c),just(c), font(14)) Interest rate on loans



' Bills held by hh and psbr

graph fig_b_hh_3 b_hh_3

fig_b_hh_3.draw(shade, bottom) 0014 0035

fig_b_hh_3.datelabel format(yy)

fig_b_hh_3.addtext(b) Period

fig_b_hh_3.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_b_hh_3.addtext(2, 2.8, font(b)) Transition

fig_b_hh_3.addtext(3.6, 2.8, font(b)) "New" steady state

fig_b_hh_3.addtext(t,just(c),just(c), font(14)) Government bills held by households



graph fig_r_b_3 r_b_3

fig_r_b_3.axis(left) units(p)

fig_r_b_3.addtext(-0.25, -0.3) %

fig_r_b_3.draw(shade, bottom) 0014 0035

fig_r_b_3.datelabel format(yy)

fig_r_b_3.addtext(b) Period

fig_r_b_3.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_r_b_3.addtext(2, 2.8, font(b)) Transition

fig_r_b_3.addtext(3.6, 2.8, font(b)) "New" steady state

fig_r_b_3.addtext(t,just(c),just(c), font(14)) Interest rate on government bills (base rate)



graph fig_psbr_3 psbr_3

fig_psbr_3.draw(shade, bottom) 0014 0035

fig_psbr_3.datelabel format(yy)

fig_psbr_3.addtext(b) Period

fig_psbr_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_psbr_3.addtext(2, 0.1, font(b)) Transition

fig_psbr_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_psbr_3.addtext(t,just(c),just(c), font(14)) Government budget deficit



' Private wealth

graph fig_v_3 v_3

fig_v_3.draw(shade, bottom) 0014 0035

fig_v_3.datelabel format(yy)

fig_v_3.addtext(b) Period

fig_v_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_v_3.addtext(2, 0.1, font(b)) Transition

fig_v_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_v_3.addtext(t,just(c),just(c), font(14)) Wealth of households



' Public debt

graph fig_gd_per_y_3 gd_3/y_3 gd_net_3/y_3

fig_gd_per_y_3.name(1) Gross government debt

fig_gd_per_y_3.name(2) Consolidated government debt

fig_gd_per_y_3.options linepat

fig_gd_per_y_3.setelem(2) lpat(dash2)

fig_gd_per_y_3.axis(left) units(p)

fig_gd_per_y_3.addtext(-0.4, -0.3) % of GDP

fig_gd_per_y_3.draw(shade, bottom) 0014 0035

fig_gd_per_y_3.datelabel format(yy)

fig_gd_per_y_3.addtext(b) Period

fig_gd_per_y_3.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_gd_per_y_3.addtext(2, 0.1, font(b)) Transition

fig_gd_per_y_3.addtext(3.6, 0.1, font(b)) "New" steady state

fig_gd_per_y_3.addtext(t,just(c),just(c), font(14)) Government debt







'***SCENARIO 4 (Money creation through repaying government debt / quantitative easing)***



' Increase the money supply by buying back government debt by central bank

smpl 0015 @last

b_cb_bar = 65



smpl @all



' Select the alternative Scenario

reform_mod.scenario(n, a="_4") "Scenario 4"



' Set simulation sample

smpl 0003 @last



' Solve the model for the current sample

reform_mod.solve(i=p)



' Store new values of shocked variables

genr b_cb_bar_4 = b_cb_bar



' Return shocked variables to their original values

b_cb_bar = b_cb_bar_0



' end of scenario





' Create charts for simulated variables



smpl 0001 0050



' GDP and inflation

graph fig_y_k_4 y_k_4

fig_y_k_4.draw(shade, bottom) 0014 0035

fig_y_k_4.datelabel format(yy)

fig_y_k_4.addtext(b) Period

fig_y_k_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_y_k_4.addtext(2, 0.1, font(b)) Transition

fig_y_k_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_y_k_4.addtext(t,just(c),just(c), font(14)) Real GDP



graph fig_pi_4 pi_4

fig_pi_4.axis(left) units(p)

fig_pi_4.addtext(-0.2, -0.3) %

fig_pi_4.draw(shade, bottom) 0014 0035

fig_pi_4.datelabel format(yy)

fig_pi_4.addtext(b) Period

fig_pi_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_pi_4.addtext(2, 0.1, font(b)) Transition

fig_pi_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_pi_4.addtext(t,just(c),just(c), font(14)) Inflation rate



' Demand deposits, time deposits and loans

graph fig_m1_h_4 m1_h_4

fig_m1_h_4.draw(shade, bottom) 0014 0035

fig_m1_h_4.datelabel format(yy)

fig_m1_h_4.addtext(b) Period

fig_m1_h_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m1_h_4.addtext(2, 0.1, font(b)) Transition

fig_m1_h_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m1_h_4.addtext(t,just(c),just(c), font(14)) Demand deposits



graph fig_m2_h_4 m2_h_4

fig_m2_h_4.draw(shade, bottom) 0014 0035

fig_m2_h_4.datelabel format(yy)

fig_m2_h_4.addtext(b) Period

fig_m2_h_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_m2_h_4.addtext(2, 0.1, font(b)) Transition

fig_m2_h_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_m2_h_4.addtext(t,just(c),just(c), font(14)) Time deposits



graph fig_l_s_4 l_s_4

fig_l_s_4.draw(shade, bottom) 0014 0035

fig_l_s_4.datelabel format(yy)

fig_l_s_4.addtext(b) Period

fig_l_s_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_l_s_4.addtext(2, 0.1, font(b)) Transition

fig_l_s_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_l_s_4.addtext(t,just(c),just(c), font(14)) Loans



' Bank liquidity and deposit and loan rates

graph fig_blr_4 blr_4 blr_bot blr_top

fig_blr_4.options linepat

fig_blr_4.setelem(2) lpat(dash1)

fig_blr_4.setelem(3) lpat(dash1)

fig_blr_4.draw(shade, bottom) 0014 0035

fig_blr_4.datelabel format(yy)

fig_blr_4.addtext(b) Period

fig_blr_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_blr_4.addtext(2, 0.1, font(b)) Transition

fig_blr_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_blr_4.addtext(t,just(c),just(c), font(14)) Bank liquidity ratio



graph fig_r_m_4 r_m_4

fig_r_m_4.axis(left) units(p)

fig_r_m_4.addtext(-0.3, -0.3) %

fig_r_m_4.draw(shade, bottom) 0014 0035

fig_r_m_4.datelabel format(yy)

fig_r_m_4.addtext(b) Period

fig_r_m_4.addtext(0.05, 1.5, font(b)) "Old" steady state

fig_r_m_4.addtext(2, 1.5, font(b)) Transition

fig_r_m_4.addtext(3.6, 1.5, font(b)) "New" steady state

fig_r_m_4.addtext(t,just(c),just(c), font(14)) Interest rate on time deposits



graph fig_r_l_4 r_l_4

fig_r_l_4.axis(left) units(p)

fig_r_l_4.addtext(-0.3, -0.3) %

fig_r_l_4.draw(shade, bottom) 0014 0035

fig_r_l_4.datelabel format(yy)

fig_r_l_4.addtext(b) Period

fig_r_l_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_r_l_4.addtext(2, 0.1, font(b)) Transition

fig_r_l_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_r_l_4.addtext(t,just(c),just(c), font(14)) Interest rate on loans



' Bills held by hh and psbr

graph fig_b_hh_4 b_hh_4

fig_b_hh_4.draw(shade, bottom) 0014 0035

fig_b_hh_4.datelabel format(yy)

fig_b_hh_4.addtext(b) Period

fig_b_hh_4.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_b_hh_4.addtext(2, 2.8, font(b)) Transition

fig_b_hh_4.addtext(3.6, 2.8, font(b)) "New" steady state

fig_b_hh_4.addtext(t,just(c),just(c), font(14)) Government bills held by households



graph fig_r_b_4 r_b_4

fig_r_b_4.axis(left) units(p)

fig_r_b_4.addtext(-0.25, -0.3) %

fig_r_b_4.draw(shade, bottom) 0014 0035

fig_r_b_4.datelabel format(yy)

fig_r_b_4.addtext(b) Period

fig_r_b_4.addtext(0.05, 2.8, font(b)) "Old" steady state

fig_r_b_4.addtext(2, 2.8, font(b)) Transition

fig_r_b_4.addtext(3.6, 2.8, font(b)) "New" steady state

fig_r_b_4.addtext(t,just(c),just(c), font(14)) Interest rate on government bills (base rate)



graph fig_psbr_4 psbr_4

fig_psbr_4.draw(shade, bottom) 0014 0035

fig_psbr_4.datelabel format(yy)

fig_psbr_4.addtext(b) Period

fig_psbr_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_psbr_4.addtext(2, 0.1, font(b)) Transition

fig_psbr_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_psbr_4.addtext(t,just(c),just(c), font(14)) Government budget deficit



' Private wealth

graph fig_v_4 v_4

fig_v_4.draw(shade, bottom) 0014 0035

fig_v_4.datelabel format(yy)

fig_v_4.addtext(b) Period

fig_v_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_v_4.addtext(2, 0.1, font(b)) Transition

fig_v_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_v_4.addtext(t,just(c),just(c), font(14)) Wealth of households



' Public debt

graph fig_gd_per_y_4 gd_4/y_4 gd_net_4/y_4

fig_gd_per_y_4.name(1) Gross government debt

fig_gd_per_y_4.name(2) Consolidated government debt

fig_gd_per_y_4.options linepat

fig_gd_per_y_4.setelem(2) lpat(dash2)

fig_gd_per_y_4.axis(left) units(p)

fig_gd_per_y_4.addtext(-0.4, -0.3) % of GDP

fig_gd_per_y_4.draw(shade, bottom) 0014 0035

fig_gd_per_y_4.datelabel format(yy)

fig_gd_per_y_4.addtext(b) Period

fig_gd_per_y_4.addtext(0.05, 0.1, font(b)) "Old" steady state

fig_gd_per_y_4.addtext(2, 0.1, font(b)) Transition

fig_gd_per_y_4.addtext(3.6, 0.1, font(b)) "New" steady state

fig_gd_per_y_4.addtext(t,just(c),just(c), font(14)) Government debt