Dynamics of long-run policy simulations with no shocks

Sorry for asking a question related to my earlier post. I am only trying to keep it short…:slight_smile:

  1. So in some QUEST models…I see long-run results as follows. The paper doesn’t say, but I guess the numbers in the table below are new steady-state variables under the new trade barrier policy.

  1. Today I saw a QUEST paper that asks whether the government should use tax A or tax B. Under tax A, they show this result (relative to a baseline). Where are the dynamics in the graph coming from? I guess, from shocks? But they mention no shocks though. (https://link.springer.com/content/pdf/10.1007%2F978-3-030-71457-4.pdf, chapter 6). Or may just take equilibrium equations and simulate it…?

Yes, this seems to be about steady state transitions, with the second picture showing the transition.

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