Some global effects of President Trump’s economic program

Vol: 
CAMA Working Paper 53/2017
Author name: 
Warwick J. McKibbin
Andrew Stoeckel
Year: 
2017
Month: 
August
Abstract: 

The economic agenda of the Trump Administration, if implemented, will have large and long-lasting impacts on the US and global economies. This paper uses a global economic model to assess the consequences of President Trump’s likely economic program on the world economy. The model has 17 major economies and regions each with six sectors of production and trade as well as a capital goods producing sector. The paper shows how President Trump’s economic policies affect the global economy through trade and capital flows induced by increases in global interest rates. Using a consistent global economic model shows the contradictions in the aims of the President’s economic program particularly in the effects on the manufacturing sector. In the medium-term the policies imply increased likelihood of trade protection ultimately causing a recession.

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