Edited by Harry W. Richardson, Peter Gordon and James E. Moore II
Chapter 13: Macroeconomic Impacts of Shutting Down the US Borders in Response to a Security or Health Threat
Adam Z. Rose, Garrett R. Beeler Asay, Dan Wei and Billy Leung INTRODUCTION Several threats to the United States may raise the consideration of a partial or complete shutdown of our borders to people and goods. Such threats would include a coordinated terrorist attack or an influenza outbreak, and could last anywhere from just a few days to several months. Given that the US economy is highly dependent on international mobility of goods and people, the economic impacts of a partial or total border closure are likely to be significant. Major economic impacts would stem from four factors. First, the US imports a significant amount of both intermediate and final goods, many of which either cannot be readily replaced or can be replaced only at a significantly higher cost of domestic substitutes. Second, export demand is an important stimulus to the US economy, and it may face retaliation in the form of import bans on US goods if it imposes restrictions on goods coming in from other countries. Third, international visitors inject a significant amount of spending into the US economy. Fourth, migration provides workers at all skill levels. We will analyze the impacts of the curtailment of all of these actions using the REMI Economic-Demographic Simulation Model (REMI, 2006). The analysis is performed through a set of comparative static simulations to isolate the impact of each aspect of a curtailment, as well as a comprehensive simulation to identify interaction effects. The extreme nature of the shock to the US...
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