Socio-Economic Environment of The Commonwealth of Puerto Rico: A Long-Term View

A Long-term View
Of the Socio-Economic Environment of The Commonwealth of Puerto Rico:

Context for Planning and Decision Making
By
Elas R. Gutirrez, Ph.D.

April 2008
TABLE OF CONTENTS 1 1.1 1.2 1.3 2 3 4 4.1 4.2 5 INTRODUCTION ............................................................................................ 1 The playing field as seen in August 2005 ....................................................1 Prevailing Trends .........................................................................................3 The current predicament ..............................................................................6 ALTERNATIVE FUTURES.............................................................................. 7 BUILDING SCENARIOS: A MANAGEMENT PLANNING TOOL .................... 7 THE MACROECONOMIC MODEL ................................................................. 8 The model structure .....................................................................................9 Productivity: the critical factor ....................................................................14
ALTERNATIVE SCENARIOS ....................................................................... 14 5.1.1 The Assumptions .................................................................................14 5.1.2 The Likely Long-term Response ..........................................................17 A Short-term View for the US Economy as seen in 2006...........................27 A Medium-term View for Puerto Ricos Economy ......................................27 Alternative Long-term Views for Puerto Ricos Economy ...........................28 SOME MARKET-SPECIFIC IMPLICATIONS................................................ 30 SPATIAL AND LAND USE IMPLICATIONS.................................................. 35 SYNTHESIS.................................................................................................. 35
5.2 5.3 5.4 6 7 8
APENDIX I .......................................................................................................... 40 FINAL DEMAND MODEL STRUCTURE ............................................................ 40 9 9.1 STRUCTURAL SPECIFICATION SYSTEM: XPLORAH_22 ......................... 41 Stochastic Equations .................................................................................41
ii
9.2
Identities.....................................................................................................42
APENDIX II ......................................................................................................... 44 ECONOMETRIC ESTIMATION RESULTS ......................................................... 44 10 STRUCTURAL COEFFICIENTS ................................................................ 45
APENDIX III ........................................................................................................ 94 ESTIMATES OF HOUSING UNITS BUILT WITHOUT PERMITS....................... 94 10.1.....................................................................................................................96 10.2.....................................................................................................................96
iii
LIST OF FIGURES
Figure 1 Rate of Growth Real Gross Domestic Product Puerto Rico 1972 2006 ..4 Figure 2 Population Age Composition 1971 2005 and Forecasts 20025 ...........5 Figure 3 Financial Condition of Families 1996 - 2005 ...........................................6 Figure 4: Economic Cycles .................................................................................14 Figure 5: Rates of Change of Real Public Investment 1972-2007 and assumed 2008 - 2025..................................................................................................15
iv
LIST OF TABLES
Table 1: Model Variables: Mnemonics and Descriptions ....................................12 Table 2 Endogenous Variables 2008 2025 Under Two Scenarios...................63 Table 3 Exogenous and Policy Variables 2008 - 2010........................................83 Table 4 Housing Units Built 1955 - 2004.............................................................95
1 Introduction
This paper describes in certain detail an econometric model designed to generate inputs within the Xplorah Spatial Decisions Support System. The paper also provides context to understand the current economic condition of Puerto Rico as a basis for planning and decision making at public and private organizations.1 The paper tackles the second objective in its initial sections. Then the paper goes into technical aspects that discuss specification and estimation of equations and structural coefficients.
1.1 The playing field as seen in August 2005

The basic diagnosis on which the August 2005 report was based still stands. If anything, recent events have strengthened their validity. Thus, even running the risk of undue repetition, this report draws from the previous in certain sections to provide some background. The report then describes a long-term scenario deemed very likely given the current structure and predicaments of the economy and its social framework. As stated eighteen months ago, the economy of Puerto Rico is poised at a juncture that may very well prove to become a true turning point in its structure and long-term behavioral pattern. A number of events have come together to define a rare political context that, given the relative size and importance of the public sector in the economy of the Commonwealth and the limited diversity of the private productive structure, raises the likelihood of decisions and changes that may have lasting influence in economic psychology and behavior. The model that called for a social effort to raise the economy by its bootstraps through a strategy of industrialization financed by US capital, eventually gave rise to a mixed model of productive and dependent sectors. Puerto Ricos productive sector gained in relative size. High rates of growth took place, mainly in response to attractive stimulants to foreign investment and to the expansion of the US economy. However, even under rapid growth rates, the small starting base and the ever-evolving external circumstances, forced constant evolution and restructuring. In the meantime, the dependent sector grew in size and political power. Government substituted the private sector as the principal source of employment. Expediency and shortsightedness resulted in inefficient, ineffective, and unproductive structures that added little value to the economy, while consuming enormous amounts of very limited endogenously based resources. Federal transfer payments have become essential to minimum living standards and government operational feasibility. After decades of development along these lines and several crises, the limits of the dependency model have suddenly hit home with a key segment of the population, i.e., public sector employees. Decades of meager, and even negative, savings have dynamically worked to divest the island of the needed agility to adapt to changes brought about by globalization and the crumbling walls of protectionism. Obsolete fiscal policies have effectively discouraged savings through an inadequate tax system. This has resulted in stagnant private capital accumulation, inordinate growth of public sector expenditure and employment, and general loss of relative competitive advantages in attracting external productive capital. In short, Puerto Rico has lost much of its competitive capacity.
A draft version of this paper was made available to Puerto Rico Planning Board personnel as part of training material in the Xplorah system implementation.
1
The ingredients necessary to maintain the rates of growth of real per capita income required to sustain rapid growth of production-based living standards eroded. Not surprisingly, the political dynamics became a formidable obstacle to policy changes that would have helped in adapting to the changing times. Moreover, irresponsible partisan behavior dominated fiscal policy. The financial consequences have now come home to roost. The results of the November 2004 general elections brought an unexpected distribution of power. While the New Progressive Party (NPP) was able to attain majorities in the House of Representatives and Senate, the Popular Democratic Party (PDP) candidate for Governor prevailed with the support of a loose coalition of independent minded voters. The incoming executive found the fiscal house in disorder. Irresponsible creative accounting by past administrations, together with an eroding tax base, declining manufacturing employment, have resulted in a downgrading of Commonwealth credit rating by Standard & Poors and Moodys Investors Service. The credit evaluators eventually declared junk bond status for certain outstanding Commonwealth debt. The quality lose of Commonwealth risk has been the culminating episode of a process that accumulated a huge debt on flimsy legal grounds through the accumulation deficits. These deficits came about because of reliance on non-recurring revenues to cover recurrent expenditures. Anti-cyclical government intervention became the permanent modus operandi. To counter diminishing rates of growth of output, administrations have relied on government spending to supplement aggregate demand. Just like any addiction, the need for government expenditures grew exponentially. This dependence, combined with external shock and trends, that included unstable oil prices and intense foreign competition, have wrecked havoc on Puerto Ricos economy and government. Crises finally ensue and forced unavoidable cost-cutting measures. The political environment made the situation even worse. A divided government made management practically impossible. The resulting divided government has been unable to tackle the needed budgetary actions. The Governor vetoed the Joint Resolution containing the 2006 fiscal year budget sent by the NPP dominated legislature, after concluding that, contrary to the constitutional mandate, it was in deficit. The Governor submitted a package of revenue enhancing measures but they the legislature rejected them. The expenditure cutting measures include payroll reductions (without layoffs!). Not surprisingly, these have unleashed a choir of opposition from public sector labor organizations. Independently of is the result of the political battle that is now taking place, a structural imbalance between legislated expenditures and insufficient recurring revenues will force another crisis unless dealt with financially sound policies. Structural fiscal reform is a necessity more than a recommended approach. Public investment is on the balance whenever credit worthiness is questioned by the capital markets. And it has been. The political system acts however, more like a constraint than a facilitator on the needed policy changes. Thus, instead of the supply driven structure necessary to sustain real growth and to raise living standards for prolonged and sustainable periods into the future, a demand driven economy has taken root. A profound crisis appears to be the minimum required stimulus to break the vicious circle of the dependency model now in place. Not unlike the phenomenon seen in other jurisdictions, fueled by the liquidity stemming from government spending and illicit drugs transshipment and consumption, a dynamic
and rapidly growing underground sector2 developed in Puerto Rico during the second half of the XX Century. The interrelated dynamics of these and other forces have sustained thriving import, distribution, wholesale and retail sectors. Cash flows are considerably more substantial than those one would expect from an economy devoid of a relatively large underground component. The above constitutes an incomplete sketch of salient features that characterize the current underlying network of socio-economic relationships in Puerto Rico. Both, public and corporate business long-term planning decision makers must be aware of them to assess risks adequately, even as opportunities are seized.
1.2 Prevailing Trends

The Commonwealth has lost what were its comparative advantages during the period of industrialization. These included mostly free access to the US market, tax exemption for US corporations with operations in the island and relatively low wages. Low wage rates ceased to be an advantage due to the application of federal minima. Several oil refineries and a petrochemical downstream complex of manufacturing industries located on the island during the 1960s, benefiting from a US oil import quota granted to Puerto Rico for importation of foreign sourced petroleum. The price differential under which importing firms were able to compete was obliterated during the 1970s by suddenly increased imported oil prices. After the politically motivated oil shock, the important petrochemical industrial complex developed in Puerto Rico collapsed. The economy of the island has never fully recuperated from the restructuring experienced during the 1970s. The seriousness of the damage is reflected in the real growth performance since experienced. See Figure 1 below.
The underground economy, as a concept, includes activities that have the ultimate objective of simply avoiding taxes, but are otherwise legitimate. Tax avoidance, however, may be unlawful. Underground activities may also include those carried out by illegal aliens and otherwise legitimate activities organized with the purpose of money laundering. The wide interpretation of the term would also include criminal activities. On this category, the most salient are those linked to illegal drug importation, distribution, wholesale, retail and/or re-export to other markets, e.g., US and Europe. Activities closely linked to this segment of the criminal underground include the illegal importation, distribution and sale of arms. The abominable trade in human beings is also present in this geographic area. However, these activities are also found in other jurisdictions of the US, and should not to be identified as emblematic to Puerto Rico. The relative size of government and underground sectors of this economy, in contrast to the legitimate private sectors of commerce and production, constitute a social and economic problem that have not been adequately addressed and continues to grow.
Figure 1 Rate of Growth Real Gross Domestic Product Puerto Rico 1972 2006
Gross Domestic Product at constant 1954 prices per employee (% ch. a.r.) (Actual)
10 8 6 4 2 0 -2 -4 1980 1990 2000 2010 2020
After the crisis of the 1970s, manufacturing regained strength. This was achieved in 1976 through revised US tax code. The revisions provided incentives granted by the US Congress to what were known as possession corporations. These tax incentives have now been terminated with disastrous effects. Starting in January 2006, the Commonwealth lacks for the first time federal stimulants for manufacturing investments in the island. This development accounts for the loss of more than 25,000 jobs since it became evident during the 1990s that the special tax treatment would be lost. Access to the US market has been obtained by other jurisdictions as a result of treaties such as NAFTA and the global general crumbling down of trade walls. High rates of growth are no longer typical of the Puerto Rican economy. In fact, growth has become a difficult goal to achieve. The productive sectors of the economy have retreated and in their place government (and underground activities) has had to step in to fill the gap. As a result, the economys center of gravity has shifted from production to consumption; from supply to demand. Even in spite of spectacular progress in per capita incomes and the development of a middle class, dependency indexes are worrisome. Insufficient capital accumulation and demographic realities constitute what has been a formidable obstacle. Participation rates are below 50 percent of the working age population; age-dependency ratios are increasing rapidly under the pressure of an aging population; family structure has changed dramatically as single mothers account for more than 50 percent of live births; approximately 50 percent of the resident population lies below federal poverty line standards. From the point of view of productive capacity and sustainable living standards, the most worrying trend is the age composition of the resident population of the island. Official projections forecasts that the juvenile dependent population (14 and under) will equal in number the working age population. The geriatric dependent cohorts (65 and over) will approach 1/5 of the total resident population by year 2025. Together, the juvenile and geriatric dependent cohorts will account for 37 percent of the population in 2025 if present net migration trends hold. If emigration of the population in working age brackets accelerates, the dependency rates would surely increase unless the pattern of emigration tilts toward complete families. In that case, the growth of the total population resident in the island will experience a stoppage. A zero growth condition would, in turn, generate an accelerated aging process. Figure 2 illustrates the numbers for these groups for the historical period 1970 2000, as well as the projected levels for 2000 2025.
Figure 2 Population Age Composition 1971 2005 and Forecasts 20025

3000 2500 2000 1500 1000 500 0 75 80 85 90 95 00 05 10 15 20 25 3000 2500 2000 1500 1000 500 0
In thousands
Population 14 and less Populaton 15 through 64 Populaltion 65 and older
As the private productive sectors have lost the capacity to create and sustain jobs at the required level and rates, the public sector has taken the slack upon its back. Public expenditures in infrastructure, purchases of goods and services, and the employment of a close to a third of the labor force, have produced a gigantic dependence on government. Populist postures assumed by politicians of all parties, compounded by growth unions in the public sector stimulated by politicians with strictly electoral goals-have combined to generate rigidities and serious management difficulties. Reliance on non-recurrent revenues, disguised deficit spending and excessive public debt at central and municipal governments, as well as by public corporations, has undermined the credit position of several public corporations and most recently of the Commonwealth government. Reliance on, and abuse of, the Government Development Bank for shortterm financing exhausted its capital base. In spite of these troubling signs, aggregate demand, in its macroeconomic meaning, remains strong. Federal transfer payments constitute a formidable component of disposable personal income sustaining personal consumption expenditures. Historically low interest rates and substantial subsidies in multiple forms, have kept the demand side of the housing market at very high levels. This is evidenced by prices and turnover time of new or existing units. Reflecting the inadequacies of public transportation, the automobile and other motor vehicles market remains strong in spite of hefty excise taxes, high and increasing gasoline prices, and lackluster employment levels. It remains to be seen whether this strength is sustainable in the future. The intensity of the current recession is being felt in these two markets. The real estate market has shown clear signs of slowing down and, at the moment, is behaving as a buyers market. Anecdotal evidence and industry indicators point to longer absorption periods for sales and rentals. This is already influencing the rate of growth of prices. The automobile market has shown dramatic contraction in sales when compared to the previous two year period. Other signals of trouble are also evident. These include repossessions due to underperforming auto loans and delinquency rates. The record sales of the previous two years are sometimes brought up as partial explanation of the current contraction. However, when seen in a wider context and in conjunction with other indicators, one must conclude that the market is just reflecting a deep, long and wide contraction. A contraction that is not necessarily cyclical. At any rate, what is certain is that structural reforms are needed to change the existing dependency model and provide for growth at
sufficient rates.
1.3 The current predicament

The economy of Puerto Rico is highly leveraged. This is especially true for the government sector. Figure 3 illustrates the trajectory of three per capita indicators, i.e., consumer debt (Dc/P), public debt (D/P), and family financial assets (KFc/P). (Mortgage debt is not included.)
Figure 3: Financial Condition of Families 1996 - 2005
Per Capita Consumer, Public Debt and Family Financial Assets
16,000
14,000
12,000
Million Dollars
10,000
8,000
6,000
4,000
2,000 1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
End of Fiscal Year Dc/P D/P KFc/P
A stern warning from Moodys Investor Services and from Standard & Poors credit rating agencies that further downgrading of the Commonwealths debt would be inevitable if fiscal discipline is not attained. This situation has tipped the balance of forces. In 2005, Governor Acevedo submitted to the Legislature a General Fund expenditures budget, explicitly exposing long disguised structural imbalances and complemented by short-term revenue raising measures. The House of Representatives refused to approve the budget resolution. Therefore, by constitutional provision, the budget approved by the previous Legislature remained in place. That budget was already deep in deficit. In 2006, the Governor submitted a new budget for legislative consideration. A fiscal reform package contemplating the implementation of a broad based consumption tax finally became unavoidable. A consumption tax was part of a comprehensive restructuring of the tax system recommended by a commission named by the Governor. The commission had been charged with the mission of proposing a new approach that would widen the tax base and provide relief to the salaried working class from the current asphyxiating tax system. The system is now generally perceived by taxpayers as unjust, inefficient and biased. The opposition controlled legislature declared the initiative dead on arrival. The revenue raising measures were rejected outright and a questionable expenditure resolution was voted by the majority. The budget resolution approved by the legislature exceeded the Treasury certified forecasted revenue estimate. The Governor vetoed the Joint Budget Resolution.3
By constitutional mandate the ending fiscal years budget is automatically enacted in this eventuality. However, when confronted with actual revenues as of June 30 of each fiscal year, the current budget is in undisputable deficit. Thus, the Governor ordered expenditure cuts and a
3
2 Alternative Futures
History will eventually consist of what today is one of many possible futures. This is the basis of the reality of uncertainty. Exploring the future is a matter of discovering what is possible. Further, it implies identifying and assessing the likelihood of the possible. Imagination and knowledge of current structures provide the basis of such exploratory endeavor. Models are useful as instruments with which to explore how sensitive the systems they emulate are to assumptions regarding the behavior of exogenous variables. Exogenous variables are not determined within the model. Rather, they are determined by policy decisions or by forces not explained within the model. Variables whose values respond to policy decisions include: short term interest rates, government expenditures and investments, commodity prices subject to manipulation by cartels, growth paths of other countries economies, and many others. Several long-term scenarios have been defined and explored with a macroeconomic model. The scenarios differ in terms of the exogenous variables vector used. Certain variables are chosen to follow specific trajectories into the future for each scenario. The last year for which all necessary actual data are available in Puerto Rico is fiscal year 2005. Starting in 2006, the time horizon for these long-term scenarios projects to fiscal year 2025. This is a very long period. In fact, it is likely that during that spans of time the economy of Puerto Rico will experience structural changes. The model, however, assumes that the structure will remain stable. This is an important limitation that must be kept in mind as the outputs obtained from the model are analyzed and evaluated.
3 Building Scenarios: a management planning tool

When trends are subject to external forces or to influences that infringe on the normal market dynamics, scenario building becomes a very useful tool for management. This is particularly true under conditions of ensuing structural change. Under such conditions, trends lose much of their value as past relationships readjust to the emerging structure. A couple of scenarios were drawn in our 2005 report to frame circumstances developing at that time within the likely bounds of possibilities. In our August 2005, this author explored a number of alternative scenarios. Among them, two medium-term scenarios were drawn.4 Scenario #1: Given the political realities, trends, resistance forces, and predictable conditions, a likely scenario in the medium term would include the following elements. The executive and the legislative branches come to an agreement that avoids layoffs and reduced workweek. The agreement includes symbolic expenditure cuts and several revenueenhancing measures. Among these, a special tax on financial institutions and an upward shift in reduced work week and salary cuts (initially on voluntary basis) in order to avoid actual layoffs. The political impasse brought about by a divided government congealed into a financial fiscal crisis. The sudden perception that government job security may be a thing of the past stirred a hornets nest. All interested parties cried foul. All were in favor of taxing someone else. No one was willing to step forth and volunteer any sacrifice. Trust is now a very scarce commodity in the island, while cynicism abounds. The present tens is used to place the reader in the future point in time when events have taken place and driven the economy to the described state of affairs in each scenario.
4
the rate on capital gains. The intention of considering a tax reform effort is jointly announced with the rating agencies attention as principal target. The real goal would be to gain time. Underground activities expand moderately. Scenario #2: The executive and the legislative branches are unable to come to an agreement and public employee layoffs take place. Wide-ranging protests are organized by labor unions. Legislative initiatives are bogged down. The possibility of considering a tax reform effort is scuttled and the Commonwealth credit rating is downgraded in December. Several municipal governments declare technical bankruptcy. The economy of the island goes into recession as total employment drops, construction activity slows down and sales only keep up with inflation. Underground activities expand rapidly. Eventually a combination of both scenarios actually took place.
The unsustainable fiscal equations now in place will have be the subject of major changes in the future. Present conditions are simply not sustainable. If, in spite of what fiscal responsibility demands, the conditions prevail, living standards would decline, emigration of the significant numbers of productive elements of the social structure will occur and the island would accelerate towards conditions typical of inner cities, as they are abandoned by the middle class and become concentrations of the disadvantaged left behind. Puerto Rico has lived through this in the past. One would hope that the dynamics of social change would provide enough energy to avoid this scenario. The political and partisan struggles have forced a distorted perception on island residents of what the long-term means. Long-term has come to be conveniently understood by some as a time beyond the next general elections. Of course, that is just foolhardiness. Thus, in exploring the future, one would raise the likelihood of action needed today to avoid the previously sketched long-term deterioration. Included in the necessary set of policy decisions would be a new tax structure. The new tax structure must include a general consumption tax, in the form of a value added tax (VAT), complementing a significantly reduced marginal income tax rate structure. Abandonment of the 6.6 percent general excise tax on imported consumption goods is a very likely event. This has, in fact, already began to take place with the approval of a sales tax and derogation of the excise tax. Less likely, but even more important, would be a realignment of valuation of real assets for tax purposes. This is a political taboo. However, it is inevitable in a longer-term horizon. The key unknown still remains, i.e., how can the island restructure its economy from a consumption driven to production driven system? If this restructuring is not achieved, real growth rates will remain close to those barely required by population growth and price inflation. In real terms, though, growth and living standards would remain lacking.
4 The Macroeconomic Model

An econometric model with simulation capabilities has been applied as an instrument to
help explore future long-term scenarios for the Puerto Rican economy.5 The public sector is directly or indirectly the largest employer and spender. Through decades of continued fiscal intervention seeking to stimulate aggregate demand and to absorb surplus labor, the economic structure has become excessively dependent on policy decisions and political priorities. Such a system is extremely difficult to model. The time series of macroeconomic and sector data tend to behave contrary to expectations drawn from economic theory. Moreover, the quality of macroeconomic and sector data has deteriorated. Therefore, specification difficulties are compounded by errors in variables that become impossible to cure. Some of the specification difficulties stem from the new composition and nature of production. Growths of the services sector, together with the development of symbolic activities that produce intangible products, make the measurement of production an increasingly difficult task. The new nature of production also stems from the way that production activities are organized. In the new era, decentralization of production and globalization of markets permits these activities to be overlooked by the government statisticians charged with the responsibility of monitoring them. Even counting heads has become a difficult and costly endeavor. Thus, population figures are now characterized by larger measurement error. Undercounting is now accepted in light of legal and illegal immigration. To complicate matters even more, in recent decades the informal sector of the economy has grown substantially. This fact generates yet another difficulty. By definition, this sector of the economy and the activities and transactions that take place are difficult to detect and record. Even when accounted for, underground activity measurements tend to be partial and biased. Thus, the quality of macroeconomic and sector series become even more suspect. Paradoxically, new and powerful computational, and model estimation capabilities, are increasingly restricted by lack of basic reliable data.
4.1 The model structure

Puerto Ricos economy is extremely open and intensely intervened by government. Modeling such a system is a daunting task. Moreover, the quality of data has deteriorated steadily since the 1960s. The limitations of this analytical instrument have to be placed on the table from the start. The main function of the macroeconomic model used here is to forecast the vector of final demand. Final demand includes all components of consumption expenditures, investment, exports and imports. Thus, it excludes intermediate demand, i.e., that part of total production that is used by the economy to produce other products and services. The model forecasts GDP produced, and employment levels sustained, in five sectors of the economy, i.e., agriculture, manufacturing, services, construction and government. The model forecasts important variables determining land-use pressures. Thus, key variables of the housing market are explicitly dealt with within the models structure. The model forecasts new housing units built by the private and public sector. The dynamics of the housing market are incorporated through a stock-flow equation that determines
5
The Final Demand macroeconomic model applied here has been designed to generate scenarios for the Spatial Decisions Support System (SDSS) known by the acronym Xplorah. The version used is a modification of the model specified and estimated as version System: Xplorah_22. System: Xplorah_22 generates a model in the EViews nomenclature Xplorah_Model_23.
the housing stock. The diagram that follows indicates the relationship between the macroeconomic and input-output models incorporated in the Xplorah system. The arrows connect model modules indicating the direction of dependence between variables.
Chart 1: Xplorahs Economic Subsystem Interface
The model reacts to the influence of externally generated forces. This is achieved through a set of key variables. These variables permit limited simulation of external conditions such as US monetary and fiscal policies. For instance, short/term interest and mortgage rates and US federal transfer payments. Other key variables are the price of oil, the intensity and fluctuations of manufacturing activity and the real rate of growth of the US economy. Population and housing receive a special treatment due to their importance to land uses and special demand. Housing demand and supply are endogenous to the system. The version of the model discussed in this paper also treats population as endogenous, via an equation. Xplorah determines population through a separate model. Demographic change is a critical dimension determining the size and quality of the labor force, the composition of personal consumption expenditures, the savings potential, the demand for social services and numerous other key factors. That is precisely the reason that this model yields its more fruitful insights when integrated into the Xplorah EDSS. Table 1 lists all variables included in the New Model and the equation number for each endogenous variable. The model has 38 equations. Of this total, 26 are stochastic equations while the rest are identities. All equations are listed in the Appendix I. The
10
structural coefficients are obtained through application of the method of weighted ThreeStage Least Squares (W3LS). The estimated coefficients, standard errors of estimate, calculated values for the t statistic, and probability that the calculated values are due to sheer chance appear listed in Table 2, Appendix II.
11
Table 1: Model Variables: Mnemonics and Descriptions

IMPORR CNDR EXPORR POP CSR YDISPR CDR IFIXCPRR IFIXPLEPRR PRODUCTIVITY WEALTH_FAM FAMILIES IPDCONS NUVIVPRI GDP_AG GDP_SERV GDP_GOV GDP_MAN GDP_CONST EMP_AG EMP_CONST EMP_SERV EMP_MAN NFP CER CER_TOTAL IFIXCR IFIXPLER IR Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Endog Eq1 Eq2 Eq3 Eq4 Eq5 Eq6 Eq7 Eq8 Eq9 Eq10 Eq11 Eq12 Eq13 Eq14 Eq15 Eq16 Eq17 Eq18 Eq19 Eq20 Eq21 Eq22 Eq23 Eq24 Eq25 Eq26 Eq27 Eq28 Eq29 Real Imports deflated by imporindex_92 Real Consumption Expenditures Non-durables Real Exports deflated by Imporindex_92 Population Real Consumption Expenditures Services Real Disposable Personal Income Real Consumption Expenditures Durables Real Fixed Private Investment Real Fixed Private Investment Machinery Equipment Millions of GDP in 1992 prices per 1000 non-government employee Perceived Value of Families Wealth Number of Families Implicit Deflator Construction (1992=100) Number of New Private Housing Units Unadjusted for Unaccounted Gross Domestic Product Agriculture Gross Domestic Product Services Gross Domestic Product Government Gross Domestic Product Manufacturing Gross Domestic Product Construction and Mining Employment in Agriculture Employment in Construction Employment in Services Employment in Manufacturing Net Factor Payments to Foreing Residents Real Personal Consumption Expenditures deflated by imporindex_92 Real Personal plus Government Consumption Expenditures Real Fixed Domestic Investment Construction Real Fixed Domestic Investment Plant and Equipment Gross Domestic Investment, total
12
IFIXR IFIXGR GDPR GNPR AGGREGATE_DEMAND EMPLOYMENT POP_ACTIVE SHARE_GOV_AD HOUSING_STOCK CGR D936 DEY DH EMP_GOV FRMCPR IFIXGR_C IFIXGR_M IMPORINDX_92 IPRCHIR MAN_US_CAP_UTIL_INDX MORTG_30 NUVIV_UNACCOUNTED NUVIVPU P_PER_FAM PP_VENEZUELA RGGDPUSR TIME UNDERGROUND_INDEX USTRPR
Endog Endog Endog Endog Endog Endog Endog Endog Endog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog
Eq30 Eq31 Eq32 Eq33 Eq34 Eq35 Eq36 Eq37 Eq38 Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog Exog
Real Fixed Domestic Investment Real Fixed Public Investment Real Gross Domestic Product deflated by imporindx_92 Real Gross National Product in 1992 prices deflated by imporindex_92 Real Aggregate Demand in Constant Prices 1992 Import Prices Total Employment (in thousands) Proportion of Total Population Employed Proportion of Government to Non-Government Aggregate Demand Housing Stock Consistent With Decenial Census Data Government Consumption Expenditures in 1992 Prices Dummy Accounting for the Demise of 936 Election Year Dummy Hurricane Year Dummy Employment in Government Prime Rate Real Fixed Public Investment Construction Government Real Fixed Public Investment Machinery and Equipment Government Price Index to Deflate Sector GDP 1992=100 Real Changes in Inventories Deflated by imporindex_92 Manufacturing Capacity Utilization Index US Year Averages Conventional 30 Years Mortgage Rate Housing Units Built Unaccounted Number of New Public Housing Units Number of Persons per Family Venezuela Ta Juana Light Real Rate of Growth of US GDP Year 1955=1 An Index of Underground Economic Activity Real Transfer Payments from US Government deflated by imporindx_92
13
4.2 Productivity: the critical factor

Productivity is dependent on capital, technology and population characteristics, education and skills. Productivity is also dependent on social organization and values. Higher standards of living, measured by real disposable income per capita, are dependent on productivity. Advances in productivity require savings (internal or external), investment, and capital accumulation. But they also require a qualitative contribution. Population qualities determine labor skills and management prowess. Together, these factors determine productivity growth rates. A crude measure of productivity can be obtained using real gross domestic product per employee. With two exceptions in fiscal years 1975-76 and 2000-01, since 1971 the economy of Puerto Rico has failed to exhibit real rates of growth of productivity in any year above 4.5% per year. Moreover, during this historical period, average productive growth has been below 2% per year and in 6 occasions, it has shown negative rates. This is clearly shown in Figure 4.
Figure 4: Economic Cycles

Gross Domestic Product at constant 1954 prices per employee (year % ch.) (Actual)
10 8 6 4 2 0 -2 -4 1975 1980 1985 1990 1995 2000 2005
Thus, productivity constitutes a critical target for development policies. A scenario that explores the effects of a significant investment stimulus has been designed and tested with the Xplorah Final Demand model. This scenario explores the long-term effects of a sustained investment effort carried out by the public sector. This public investment push effort is simulated by assuming certain sustained rates of growth for the government components of fixed real investment expenditures in machinery and equipment, and fix investment in construction.
5 Alternative Scenarios
After examining several options, two scenarios were chosen. Suggestive names were given to these scenarios: Accelerated Public Investment and Moderate Inflation Stagnant Public Investment and High Inflation
5.1.1 The Assumptions

The Accelerated Public Investment scenario relies on a sustained rate of growth of real government investment in construction, starting in 2007 and sustaining itself until 2025,
14
of 12 percent per year above the rate of inflation. The assumption is that a policy decision to improve and expand infrastructure is implemented. Inflation is accounted by the IMPORINDX_92 variable at a rate of 2 percent per year. The Stagnant Public Investment scenario relies on a stagnant level of real government investment in construction for the duration of the simulation period. Inflation was assumed to sustain at a rate of 7 percent per year.
Figure 5: Rates of Change of Real Public Investment 1972-2007 and assumed 2008 - 2025
Real Fixed Public Investment (% ch. a.r.)
50 40 30 20 10 0 -10 -20 -30 75 80 85 90 95 00 05 10 15 20 25
Actual Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
Government employment stays constant at a level of 333,000. Government real expenditures grow at a rate of 1 percent per year (1 percentage point over inflation). The growth rate pattern of government investment in machinery and equipment fluctuates mimicking recent past cycles. These fluctuations are assumed to be associated with programmed replacement and other cyclical imperatives. The economy of Puerto Rico is eventually absorbs loss of federal industrial tax incentives, i.e., section 936 of the US Tax Code. This assumption is reflected the binary variable D936. However heroic the assumption may be, for purposes of this analysis, it is assumed that a political solution is reached between the two dominant political parties in Puerto Rico that once again enables the Commonwealth government to sustain a long-term effort to lift the economy from its present low savings, low investment, and slow productivity growth condition. The goal of the exercise is to gain a rough idea what would be the
15
minimum sustained long-term public effort required, given that current rigidities persist. The scenario assumes that the government sector is able to control consumption expenditures and to redirect its priorities towards capital accumulation. It was further assumed that the public sector financial capacity improved in quality and increased in magnitude. This is achieved by a strategy consisting of two basic components: instituting a Value Added Tax ear-marked to finance the investment push and a wide ranging revision of tariff structures for utilities based on marginal cost pricing. The effort is assumed to be sustained for the length of the planning horizon. The likely results of these assumptions are explored by simulating them with the macroeconomic model. The model responds to values and trajectories for a set of four exogenous variables that reflecting the assumed conditions. These are: Once a set of parameters is estimated with data spanning the historical period, the model is solved for a longer period that includes the future. These solutions provide results that depend on the assumptions regarding exogenous variables and policy instruments. Solutions obtained this way make up alternative futures or scenario consistent with the structure of the model. A Base Line scenario acts as a benchmark. The simulations assume that the loss of federal incentives to possession US corporations operating in Puerto Rico is slowly absorbed. As this takes place, the economy adapts and the damaging effects from the loss of these incentives are dissipated. These assumptions are introduced through the dummy variable D936. An assumption regards the behavior of a variable that is key to Puerto Ricos economy due to its reliance on oil to meet energy demand. Thus, the price of oil is a critical exogenous factor. Venezuelas Tia Juana light petroleum price is used as a proxy for oil prices within the model. It is reasonable to assumed that the price of oil will approximate forecasted US refiners acquisition costs in the short to medium terms. On the other hand, In the long-run, it is a matter of speculation and/or geo-political analysis. Exogenous variables subject to change by external action are known as policy instruments Together, these variables define a scenario. Tables 4 and 5, included in the Appendix, compare two alternative scenarios. Table 4 lists endogenous variable values during the simulated period. Table 4 lists and compares values introduced for endogenous variables. Table 5 lists and compares values assumed for exogenous variables or policy instruments. Figure 3 illustrates the behavior of four instruments of government intervention in the economy. The charts included in the group that appears as Figure 5 show the historical and assumed future annual percentage change in: 1) short term interest rates (influenced by the US Federal Reserve monetary policy); 2) real Commonwealth government consumption expenditures; 3) fixed Commonwealth investment in construction; and 4) real Commonwealth investment in machinery and equipment. The projected paths of key policy instruments exogenous to the system, are depicted in Figure 6. The trajectories projected into the future define two scenarios: 1) Stagnant Public Investment & High Inflation; and 2) Accelerated Public Investment & Moderate Inflation.
16
Figure 6: Time Paths for Key Exogenous and Policy Variables

Government Consumption Expenditures in 1992 Prices 9000 8000 7000 6000 5000 4000 3000 2000 75 14000 12000 10000 8000 6000 4000 2000 0 75 80 85 90 95 00 05 10 15 20 25 80 85 90 95 00 05 10 15 20 25 Real Fixed Public Investment Construction Government 4 0 75 80 85 90 95 00 05 10 15 20 25 Real Fixed Public Investment Machinery and Equipment Government 400 350 300 250 200 150 100 50 75 80 85 90 95 00 05 10 15 20 25 12 8 20 16 Prime Rate
Price Index to Deflate Sector GDP 1992=100 600 500 400 300 200 40 100 0 75 80 85 90 95 00 05 10 15 20 25 20 0 75 80 140 120 100 80 60
Venezuelan Tia Juana Light
85
90
95
00
05
10
15
20
25
The graph illustrates the paths of two important instruments: real fixed investment in construction and in machinery and equipment, undertaken by government agencies. The scenario simulates that Commonwealth government is able to finance a sustained push of capital accumulation, mainly in new and replacement infrastructure that will call for a sustained annual growth in real investment in machinery and equipment. A comparison is shown with the trajectory assumed by the alternative scenario. Alternative future behavior of oil prices are introduced through the future trajectory of Valenzuelas Tia Juana Light, the proxy variable. The path assumed for oil prices is also illustrated in the set of charts. The historical series runs from fiscal year 1971 to 2005. The simulated path starts in fiscal year 2006 and ends in 2025.
5.1.2 The Likely Long-term Response
17
The following set of graphs illustrates the likely behavior of selected key endogenous variables responding to conditions under the two scenarios being explored. All graphs follow the same format. Actual observed values are depicted in blue dots while colored lines depict the projected paths of endogenous variables. The shaded areas depict the forecasted period 2006 2025. Note that a simulated investment effort by the Commonwealth, of 10% per year in real investment in machinery and equipment and 7% in construction, takes a relatively long period to reflect itself in increasing levels of real fixed investment. The income side of the economy keeps expanding under the influence of sources uncoupled from production activities, i.e., transfer payments, government employment and underground activities. A turning point in real fixed investment levels lags for at least 5 years into the future to take hold. Moreover, this pick up takes place with the help of an undefined process of structural adaptation to the demise of federal incentives to manufacturing. Thus, the model is a warning for policy makers. It appears that the economy of Puerto Rico faces rigid constraints. Growth potential in the short and medium terms is quite modest. Consumption components of aggregate demand, however, continue to grow, probably sustained by transfer payment flows and other underground activities. Population growth continues to decelerate. This deceleration helps to keep growth of per capita welfare indicators positive. However, this deceleration responds to an aging process that affects savings potential and productive capacity. Even when the new units built have been adjusted to account for those built without permits, the housing stock equation consistently yields figures above the official estimate of registered houses. This is observed since the beginning of the decade of the 1980s. The models results are indicative of the possibility that not only the annual additions to, but the housing stock itself, are indeed underestimated by official data.6 The housing equation tends to overestimate the units built during the historical period. This is especially true during the era of very high interest rates, stagnation, and inflation of the 1980s. The model apparently detects that a substantial number of houses are being built without permits. In fact, the model seems to be estimating the demand for housing, not the supply. Distinguishing from demand and supply has been a classic problem for econometricians. Demand is an ex-ante concept while supply is an ex-post result in the market. Thus, it is easier to measure supply than demand. In fact, the only time demand is actually measure is when the markets are in equilibrium and ex-post supply is equal to demand. Construction activities taking place under single plots schemes in non-urban areas without permits, and even illegally, make forecasting the housing stock a difficult task indeed. Adjustments for those particulars must relay on decennial census figures. Figure 14 includes such adjustments. Both scenarios are consistent with assumptions regarding
Explicit inclusion of units built without permits has proved tricky in previous versions of the model. This is due to the fact that this construction can only be estimated for the inter-census years. That generates a step function that does not work too well or an interpolated smoothed series that introduces a lot of error into the system. I have also corrected the accounting stock equation to include public housing built by government. Although activity that has diminished over the years, in favor of private built units.
6
18
interest rates, oil prices, government intervention and family structure. The results that follow illustrate the assumed trajectories of key policy variables for the housing market, i. e., short and long-term interest rates. As previously stated, these were used to define the working scenarios. Ultimately, the performance of the economy and the effectiveness of economic policy are evaluated by the level of employment attained. The set of graphs included here in lustrates the performance of GDP generated and employment sustained distributed by sector. The set illustrates expected yearly behavior of sector GDP and employment levels, consistent with current technology, and with conditions set for the two compared scenarios.
19
Figure 7: Real Aggregate Demand

Real Aggregate Demand in Constant Prices 1992 Import Prices 240000 200000 160000 120000 80000 40000 0 75 80 85 90 95 00 05 10 15 20 25
Actuals Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
20
Figure 8: Employment
Total Employment (in thousands) 1600 1400 1200 1000 800 600 75 80 85 90 95 00 05 10 15 20 25
Figure 9: Employment in Manufacturing

Employment in Manufacturing 180 170 160 150 140 130 75 80 85 90 95 00 05 10 15 20 25
21
Figure 10: Employment in Services

Employment in Services 1100 1000 900 800 700 600 500 400 300 75 80 85 90 95 00 05 10 15 20 25
Figure 11: Employment in Construction

Employment in Construction 90 80 70 60 50 40 30 75 80 85 90 95 00 05 10 15 20 25
22
Figure 12: Employment in Agriculture

Employment in Agriculture 70 60 50 40 30 20 10 75 80 85 90 95 00 05 10 15 20 25
Figure 13: New Housing Units Built by Private Sector

Number of New Private Housing Units Unadjusted for Unaccounted 40000 35000 30000 25000 20000 15000 10000 5000 0 75 80 85 90 95 00 05 10 15 20 25
23
Figure 14: Housing Stock

Housing Stock Consistent With Decenial Census Data 2400000 2000000 1600000 1200000 800000 400000 75 80 85 90 95 00 05 10 15 20 25
Figure 15 Active Population

Proportion of Total Population Employed .32 .31 .30 .29 .28 .27 .26 .25 .24 .23 75 80 85 90 95 00 05 10 15 20 25 Actuals Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
24
Figure 17 Productivity
Millions of GDP in 1992 prices per 1000 non-government employee 140 120 100 80 60 40 20 75 80 85 90 95 00 05 10 15 20 25
Figure 18: Proportion of Government to Private Aggregate Demand

Proportion of Government to Non-Government Aggregate Demand .30 .25 .20 .15 .10 .05 .00 75 80 85 90 95 00 05 10 15 20 25
25
Figure 18: GDP for Five Sectors

Gross Domestic Product Agriculture 1200 1000 800 600 Gross Domestic Product Construction and Mining 400 200 0 75 80 85 90 95 00 05 10 15 20 2512000 8000 4000 0 75 80 85 90 95 00 05 10 15 20 25 20000 16000 80000 40000 0 75 80 85 90 95 00 05 10 15 20 25 240000 200000 160000 120000 Gross Domestic Product Serv ices
Actuals Accelerated Public Inv estment & Moderate Inf lation Stagnant Public Inv estment & High Inf lation Gross Domestic Product Gov ernment 50000 250000 40000 200000 30000 150000 20000 100000 10000 50000 0 75 80 85 90 95 00 05 10 15 20 25 0 75 80 85 90 95 00 05 10 15 20 25 Gross Domestic Product Manuf acturing
26
5.2 A Short-term View for the US Economy as seen in 2006

A synopsis of expectations obtained from the Fair-Parke econometric model for the US economy provides a short-term view of external forces influencing Puerto Ricos economy. Real Growth and the Unemployment Rate: The predicted growth rates for the next four quarters are 3.2, 2.9, 2.6, and 2.6 percent, respectively. The unemployment rate stays roughly unchanged throughout the forecast period. The jobs are expected to increase during the years four quarters by 1.9, 2.2, 2.2, and 2.0 percent, respectively. Inflation: Inflation as measured by the growth of the GDP deflator (GDPD) is predicted for the next four quarters to be 4.4, 4.2, 4.1, and 4.0 percent, respectively. These predicted values are considerably higher than the actual values in the past few years and probably higher than most others are predicting. If the Fair-Parke model is right, inflation is going to be a problem in the next year. It is the case, however, that the model has been over stating inflation expectations for the past few quarters, and the current forecast may be another example of this. Monetary Policy: The estimated model is predicting that the three months bill rate will rise to 5.3 percent by the end of 2007. Other Variables: The federal government budget deficit was predicted to be around $100 billion in the next four quarters. By the end of 2009, it was predicted to be only $81.0 billion. The U.S. current account deficit was forecast to be around $760 billion in the next four quarters, which is very large by historical standards. It falls to $662.0 billion by the end of 2009.
5.3 A Medium-term View for Puerto Ricos Economy

The above-mentioned indicators of the US economy reflect important exogenous underlying forces that exert intense influence in the hemisphere and, indeed, in the world. In past decades, they would be seen as good news for the local economy. Although, a lag of several months was observable, higher rates of growth on the mainland translated eventually on stimuli of the local economy. However, the growth rate of the island economy has uncoupled from its historical synchronization with the US average. Real GNP contracted at a rate of -1.8 percent during fiscal 2006. Forecasted real GNP is expected to contract again this fiscal year. This trend reflects the changes in manufacturing, the slowdown in the real estate market, and increasing difficulty for the Commonwealth to expand private sector investment through anti-cyclical expansionary policies. Increasingly, the roots and the underlying logic of the current predicament, as well as the long-term trends that set conditions in the short-term, are political in essence. Thus, the medium-term must be defined in terms of the electoral cycle. The next three and a half years promise to be a period of turbulence. Badly needed initiatives will become even more difficult to launch. Fiscal reform and restructuring of the tax system promise to be unfeasible. Paradoxically, the difficulties involved in any structural change and the unlikely success of any such initiative should not be the source of major instability in certain markets in the island. For instance, even in the face of record gasoline prices, consumption will
27
likely decrease in less than proportional quantities in light of the relative inelasticity of demand. It remains to be seen how the automobile market may adjust to new excise taxes, higher license registration fees, reduced disposable incomes, higher unemployment, and higher gas prices. A deeper economic crisis, occurring within the next three years, has the potential to adversely influence the number of new units offered per year. This will reflect on other high-ticket items, and on the payment behavior of consumer loan portfolios held by local financial institutions, as well as on and the resale value of repossessed units. The housing market is more subject to cyclical forces. However, housing usually lags behind the curve. This characteristic infuses a degree of risk associated with the supply side of the market. Lead times are long and tortuous for developers. If new units miss the market and come in line during times perceived to be risky or coincidental with high and rising interest rates, prices suffer, new projects are postponed, and construction, employment and incomes will feel the pressure, thus intensifying the spiraling effects. At any rate, if the shock is limited to one year, the initial adjustment will vanish in the out years. The wage bill will prove to be even more resilient. More than 80 percent of government expenditures are due to the wage bill. Voluntary reduction in public service employment faces huge obstacles. Attrition takes time. Substantial early retirement is costly and will be faced by the dire financial condition of the retirement systems. The actuarial deficit of the Commonwealth retirement system has reached $11 billion of unfunded liabilities. The political cost of layoffs in light of very limited opportunities in the private sector is predictable.
5.4 Alternative Long-term Views for Puerto Ricos Economy

An econometric model of the Commonwealths macroeconomic system --described in another section of this document has been applied to explore alternative feasible futures. The exercise provides a very long-term view through simulated interventions. The dynamics of the present macroeconomic structure are assumed to remain in place during the period. The results obtained are not heartening. They underscore the difficulties stemming from the rigidities built into the economy throughout the years. Current predicaments reflect the dwindling number of options open to action from the public sector. Excessive use of government expenditures to stimulate aggregate demand together with an unsustainable public payroll, limits intervention possibilities without radical changes in tax and subsidy structures. The economy has become addicted to the expansionary public sector policies. The unintended results include very high transaction costs and a political environment that has become increasingly hostile to private capital. There are particularly worrisome aspects derived from the exploration, because they have political roots. The nature of the problems being faced by the economy of Puerto Rico is not in the nature of the economic cycle experience periodically by mature capitalistic economies. However, for decades Commonwealth administrations have been applying the remedies prescribed for precisely that sort of condition. The prescription calls for stimulating aggregate demand through government expenditures financed through public borrowing. The structural nature of the limitations faced by Puerto Ricos economy cannot be remedied by a strategy of permanent anti-cyclical fiscal policy. The result, of that policy has been a bloated public payroll, a dangerous level of public debt, an unjust and heavy tax burden that is being shouldered in disproportionate incidence by the middle class (especially working class families), and an economy that has grown insensitive to increasing doses of the same medicine.
28
The structural nature of Puerto Ricos economic problem lies in a basic disequilibrium between aggregate demand and aggregate supply. Aggregate demand has achieved very high levels on aggregated and per capita basis. Aggregate supply, however, is mostly satisfied through imports. Local production activities are highly subsidized and, paradoxically, taxed. Ideologically driven political efforts have been successful doing harm to the productive potential of the island. The incentives that supported a thriving and technologically world-class manufacturing sector were attacked from multiple directions and, eventually, sabotaged. Recent initiatives proposed by the executive to overhaul the tax code in order to make less punitive on income, saving, and investment were blocked by the Legislature. Populism continues to fuel public opinion toward policies that do more harm than good. These have resulted in a maze of regulatory requirements that thwart development and competitiveness. From the early stages, development of tourism met cultural obstacles and premature labor unionization. This economy is not in a position to respond quickly even to a significant and sustained investment effort from the public sector. The supply side of aggregate demand has been weakened by a wounded productive sector. The consumption components, on the other hand, fueled by transfer payments, cash flows generated by growing underground activities, and sheer needs of a population undergoing demographic restructuring, remain strong and growing. The natural unwillingness of the electorate to accept sacrifices has crystallized into a system that has become almost ungovernable. Political forces exert tremendous pressures to shift resources to satisfy immediate needs and ignore the consequences for the future living standard potential of an aging population. Moreover, political forces impede the reallocation of priorities in the public sector. They resist essential changes in the tax structure to correct the present bias against saving and investing. They resist unavoidable restructuring of the government retirement funds. They resist restructuring of management practices and strategies at the public corporations in charge of building and managing utilities and other infrastructure. The question then is: what is the most likely scenario in the long run? The answer to this question is not easy, and searching for it is even more difficult. The tools at the disposal of economists and planners draw on the past and tend to be linear in their projection into the future. The social system, however, is not build on linear relations. Trends tend to generate forces that will eventually force changes in intensity and direction. The long view in the horizon can be characterized with few phrases: stagnation of production, expansion of consumption needs, increasing dependency of growing segments of the population, emigration of a larger fraction of the middle class and of the younger labor force. On the social dimension the view is of turbulence and immobility. However, as pointed out previously, the conditions seen in the long view horizon are of the nature that has caused radical course corrections in other places. This may very well be what the future will bring, i.e., stagnation in the initial years, a resulting decline in the standard of living, more political turbulence, and then, a radical restructuring. The process would follow a non-linear response to unacceptable conditions. In colloquial words: it may be that things must get worse for them to get better. The danger lies in the fact that non-linearity is not guaranteed to produce a change in the right direction for this economy. In fact, it may be that a situation that is even worse than anticipated may ensue. Such a situation would have no feasible satisfactory exit. Stagnation is compounded by demographics and current balance sheets. Puerto Rican families have highly leveraged balance sheets. The savings capacity has not been cultivated and the safety net of public sector pension funds has been jeopardized by
29
predatory legislatures and irresponsible past administrations. The long view scenario describes a Puerto Rican society on the verge of increasingly becoming one where poor older residents become an unsustainable proportion of the population. An example of an unthinkable non-linearity would be a reversion of life expectancy trends. Such phenomenon has occurred in other social systems, e.g., the former Soviet Union. A reduction in life expectancies could trigger all sorts of economic, social and political effects. Non-linearity could manifest itself in a chaotic unraveling of the social infrastructure. It must be said that the economy of Puerto Rico has potential. This potential is even now evident. It manifests itself especially in the services sector. However, substantial investment is required. Investment in physical infrastructure and management systems is essential in order to increase export potential in quality services. Travel and tourism is a case in point. Other components of the service industries include financial and insurance industries and higher education. In order to become a true competitor in the global economy, Puerto Rico needs cities. Economic globalization is a phenomenon created from and by cities. Hardly any Puerto Rico urbanized area reaches the category of a city. The creation of a city serving as platform to participate in the world economy would open many opportunities and generate the activities most needed to break the stagnation long run trend.
6 Some Market-specific Implications

The relative permanence of entitlements in the contemporaneous Puerto Rican society, coupled with the development of underground economic activities, suggests important implications for public and corporate planning. These entitlements are associated with three basic characteristics of the resident population: 1) aging; 2) a large juvenile dependent cohort; and 3) a large proportion of the labor force that is not absorbed by the labor market. Characteristics 2 and 3 promote marginal activities and cash transactions. The cash flows associated with these income sources guarantees a floor for demand of services and consumer goods. Given that money is fungible, these cash flows liberate other income funds to complement the demand for durables. In an open economy, transfer payments and income generated by underground activities provide steam for imports and thus help sustain the commercial distribution sectors. Value added by the manufacturing sector contributes with a substantial wage bill to personal income. Profits and dividends to non-residents, by far the principal component of the manufacturing sectors factor payments, tend to flow out of the island economy since section 936 of the US Code was modified and latter terminated. This characteristic tends to reduce the local spending multiplier effect. However, the sheer magnitudes of the cash flows involved represent a formidable cushion to aggregate demand in Puerto Rico. The income and expenditure established for decades in the island has resulted in the accumulation of considerable stocks by families and individuals. These stocks include two very salient components: motor vehicles and houses. A first rate financial system has been a key factor in facilitating the accumulation of both stocks. Obviously, replacement and growth of both stocks rests heavily on the financial sector. A vigorous competition among financial institutions is taking place and is to be expected in the future. Tax policies have had a huge influence in the accumulation of real assets in Puerto Rico. Housing has been heavily subsidized directly and indirectly. Federal and local policies subsidize both, construction and financing, of housing. The automobile has become a
30
necessity, given the absence of a mass transit system and the land use pattern made possible by the automobile. Thus, demand for motor vehicles and gasoline are relatively inelastic and constitute important for tax revenue sources. Thus, the numbers of registered vehicles, and composition of the automobile stock, are not what one would expect in view of reported income levels. Consumption has become a complicated variable for economists in the present economic environment. Current consumption expenditures are dependent on disposable income, perceived value of assets, and expectations pertaining to prices, incomes and financial costs. Moreover, perceptions, needs and expectations are influenced by age. Demographics have become a critical strategic dimension for business and governments. Although still poor by US standards, Puerto Rico has acquired high levels of income, consumption and wealth per capita when compared to other countries especially in its own hemisphere. Coincidentally, the demographics of Puerto Rico have changed dramatically since the decade of the 1950s. Beyond the obvious relationship between consumption and income, one particularly important variable in understanding consumption behavior in the island is family wealth, and the role that home ownership plays in its perception. The dependence has been highlighted during the current low-mortgage rates environment. Population pressure, efficient financial markets and price expectations have combined to stimulate consumers to cash-in on perceived home equity values. These perceived values partially respond to inflated prices that reflect real supply-demand gaps and speculative pressures. Thus, in a process that feeds upon itself, high levels of demand for housing, in conjunction with speculation and the resulting housing price inflation have become important explanations of high consumption levels and highly leveraged household balance
31
sheets.7 The graph that follows illustrates the close association shown by time series of finantial assets of persons, average value of new housing units built by the private sector and a the proxy variable that infers the perception of wealth. The proxy variable rests on the hypothesis that perception of wealth is a function of past years incomes and current employment status. Statistics tend to reveled that Puerto Ricans have been low savers. Most of the family savings are in real assets, mostly homes. The rate of home ownership in the island is higher that the average for the US. Thus, accumulation of financial assets is a recent development. Nonetheless, it is developing at a considerable pace. In part this is the result of recent surges in the modernization of the securities brokerage industry, raising values of equities in the securities markets, and tax incentives toward individual retirement plans. However, speculation in real estate is a formidable force and real assets remains the main depository of family wealth in the island. Asset values are complied by the PRPB for:
1. 2. 3. 4.
7
Deposits in commercial banks Saving in federal saving banks (now non-existent) Savings in the Puerto Rico Commonwealth Employees' Association Savings in local cooperatives
A single equation model explaining family wealth perception in terms of average value of new housing units built lagged one year and the value of financial assets of persons per family, also lagged one year, yields very good fit results. See the graphical representation of the fitted values and a confidence band. The model explains 97.5 of the variation in the Wealth Perception variable during the historical fiscal years period 1971 - 2007. In future version of the model, the wealth proxy variable may be substituted by the two explanatory variables included in this single-equation model.
240000 200000 160000 120000 80000 40000 0 1975 1980 1985 1990 1995 2000 2005 Forecast: WEALTH_FAMF Actual: WEALTH_FAM Forecast sample: 1971 2025 Adjusted sample: 1972 2008 Included observations: 36 Root Mean Squared Error Mean Absolute Error Mean Abs. Percent Error Theil Inequality Coefficient Bias Proportion Variance Proportion Covariance Proportion 8657.367 5901.606 6.605216 0.045363 0.000000 0.014024 0.985976
WEALTH_FAMF
Several shocks have probably shaken wealth perception. Periods of shock would include: the 2006 government shut-down; collapse of Puerto Rican based bank shares; slowdown of real estate prices; evidence of large flows of migration of physicians, nurses, university graduates, and skilled labor; and the financial markets correction that has taken place in March 2007.
32
5. Savings in federal cooperatives 6. Reserves in public pension funds 7. Reserves in life insurance companies
Average values of new housing units built by the private sector include a component, and feed the process, of speculation that has driven housing demand in Puerto Rico, and segmented the market. As a result, this process has had tremendous impact on urban sprawl and land use dynamics.
Figure 19 Financial Assets, Average Value of New Houses, Perceived Wealth

80000 60000 40000 20000 0
160000 120000 80000 40000 0 75 80 85 90 95 00 05 10 15 20 25 Avearage Value of New Private Housing Units Financial Assets of Persons, Total Perceived Value of Families Wealth
These are segmented markets and demand-supply dynamics differs among segments. For instance, the housing market can be divided at least in four major segments: 1) the sought-after segment; 2) the directly subsidized segment; 3) the speculative post-shelter segment; and 4) the priced-out segment. The sought-after segment is the efficient market and constitutes the model long established as the goal of public policy. The subsidized segment faces the limitations of public resources to provide for those unable to satisfy the demand for housing given the prevailing price and income structure. A large portion of households in this market sees their demand for housing unmet. The speculative segment drives price inflation. Finally, an out-of-market segment includes lower middle class families that do not qualify for subsidized housing programs, but whose incomes and asset valuations are insufficient to meet down payment and mortgage financing requirements. Lack of an organized rental housing market --within the bounds of quality expectations-adds to unsatisfied housing demand pressures. This reality has become a driving force for multi-employment (second and third jobs) two-family incomes, and unreported and/or underground activities. The dynamics between interrelated forces further strengthen the
33
demand for automobiles and other related products and services, given that travel to work is essential. The relative inelasticity of the demand for automobiles and gasoline is strengthen by the forces that drive new housing supply ever farther from the city and town centers. New housing projects are located on the least expensive lands. The logic of land values and relative location reinforces urban sprawl with the resulting need for transportation, based on private automobiles. This process, supported by a revolution in computing and communications technology, has propelled a structural change in the retail market and its channels of distribution. A collateral effect of these revolutions has been the rendering of traditional outlets obsolete. The political process has served to promote protection and to retard adaptation. The unintended consequences are generally inefficiency, inefficacy and eventual higher social costs. Ironically, this environment creates the basic conditions on which efficient competitors thrive. In a stagnant economy, these competitors eat away more and more market share from the traditional sector accelerating the process of decay found in the local town commercial and real estate markets. The economic structure that enabled rapid growth in decades past has suffered severe fractures. There is no guiding principle on the public policy realm, except for spending and tax privileges to benefit organized groups. The cost of such a fiscally questionable attitude is high and growing rapidly. On the private realm, realities have produced a zero-sum game mentality common under conditions of stagnation. Solutions and strategies to extricate the economy from the trap it has gotten into are not that difficult to envision. However, now, they are politically unfeasible. So, where will the market opportunities most likely emerge or continue to-- emerge? The following categories are obvious and represent a very limited set: Security related products and services. Health care for chronic conditions and illness typical of old age. Emerging industries and enterprises substituting public services rendered still by government. Energy and water efficient products for home and office or workshop. Innovative financial services for the old such as: Reverse mortgages Assisted care living quarters Small estate management Products and process required by an increasingly cashless economy. Consolidation and diversification will become intense
It is clear that the structure of present market conditions in Puerto Rico, though vulnerable and subject to the effects of shocks with exogenous origins, exhibits a degree of rigidity that provides it with certain stability in the short and medium terms. The longterm prospects are more difficult to fathom and require continuous monitoring of the underlying trends. Much will depend on a solution to the presently polarized and paralyzing political power sharing between both major parties.
34
7 Spatial and Land Use Implications

(To be developed)
8 Synthesis
Fiscal 2007 will show a contraction of real GNP for the Commonwealth economy of between -1.8 and -1.4 percent. Official forecasts for 2008 anticipate growth of 0.6 percent. This short-term expectation looks too optimistic. At most, a 0 growth rate would seem more consistent with short-term indicators and anecdotal information. A crisis similar to the one experienced in the summer of 2006, when the central Commonwealth government was forced into a shutdown, is very unlikely. If not for the strictly financial conditions then, for political realities that would guarantee a certain electoral result. The current general economic conditions look grim to knowledgeable observers. Skepticism permeates when government initiatives are considered given the record of failures accumulated through decades of misguided intervention. The small relative size of the private sector limits it is capability to serve as an engine of growth. This imposes even greater pressure on the public sector to stimulate aggregate demand. This follows an incorrect diagnosis of the economic problem, i.e., it assumes that it is cyclical in nature, when its true nature is secular and responds to an insufficient capital stock and inadequate production platform. Following the prescription for a cyclical condition, the public sector tries to stimulate aggregate demand but in doing so, it increases the problem by expanding public debt and crowding out private initiatives. The predominance of process over substance; the excessive litigation in the Puerto Rican society; and the lopsided regulatory infringement on all aspects of life, impose transaction costs and inefficiency on an economy that cannot compete under such a heavy load. Much of this heavy load of regulation and government intervention originates as protection to local sectors and a mentality that sees government as a paternalistic entity that must accept all transferred risks from individuals and groups. Here lies the key to the capacity to participate in the global markets. There is no way out, the long-run solution it will require facing and solving this conundrum in the short-run. The economy of Puerto Rico is undergoing a structural change under conditions that limit its growth potential and foretell a stagnant standard of living. Forecasting the future under conditions of structural change is a dangerous business. However, the momentum provided by demographic trends and the rigidity of the current structure provide a basis from where to launch expeditions into the possible futures. One of the tools at our disposal is a quantitative model that mimics in a simplified manner the intricate set of relations of the economic system. For this, one must rely on historical data. Moreover, the planner must assume that the structure of the system will remain in place during the forecast period. This is a heroic assumption, especially when there are symptoms of structural change taking place. To deal with such an uncertain environment planners can construct alternative future states or scenarios. These may be more or less likely but their analysis enables the identification of strategies that may reduce to acceptable minima the risks involved. This analysis may be also helpful in identifying areas of opportunity. This report has tried to provide a rough example of a combination between the application of a macroeconomic forecasting tool and the elaboration of alternative scenarios to search the long-term horizon. The basic policy instrument on which the Commonwealth has relied to gain a competitive advantage to attract non-resident capital to its manufacturing sector will
35
vanish completely at years end. No substitute is in sight. Populist fiscal policies, abused for electoral gain, have reached a critical point. The relative size of government is no longer sustainable without painful tax measures. A mixed electoral outcome has brought about a divided government with one party dominating the legislative and the other the governorship. Under the gun of the credit rating agencies, a political battle royal unfolded with the drama of a national crisis, taking the budgetary process hostage. As the result of a rare attitude of fiscal responsibility pursued by the Governor, the executive branch implemented cost-cutting measures and submitted a tax reform package to the Legislature. Finally, the message that things could not go on as usual became clear to all but the partisan fanatics. Public employees were jolted by the sudden realization that government jobs can no longer offer immunity to the laws of economics. A slow growth regime has taken hold of the productive sectors of the economy. The demand side remains strong under the influence of a relatively large cash flow stemming from entitlements and a very large service sector. Underground economic activities add to the pool of cash, fueling consumption expenditures. Local tax policies provide a high degree of incentive to development, construction and purchases of housing. Land-use patterns, and the resulting absence of adequate mass transit, have stimulated the dependence on the automobile as the only means of transpiration. Thus, the demand for automobiles, parts, fuel, and other related goods and services is relatively inelastic -even in the medium term. In the long-term, adjustments are conceivable but will require major structural changes in urban design, the tax structure, user fees, and huge investments in infrastructure. All constitute politically difficult changes to achieve. It is likely that Puerto Rico will go through years of political turmoil and economic adjustment. Policy adjustments will require sacrifice to an electorate that has grown accustomed to being papered by populist politicians. As the current political crisis deepens, necessary policy adjustments will become even more difficult to achieve. Current tax policy is markedly biased against earned income, saving and investment. It is inefficient, ineffective and unjust. It has become a burden on the productive sector and has ceased to provide enough revenues to sustain government operations in the absence of restructuring. Manufacturing, especially in the technology intensive sectors, will probably continue to be the value added generator and the exporting engine of Puerto Ricos economy during the next two decades. However, under competitive pressures, its potential as a jobsustaining sector will continue to shrink. It will be up to the services sector to develop the exporting potential to absorb a labor force no longer employable in agriculture, manufacturing, or government. The pubic sector has reached its limits as an employer of last resort. It is no longer able to absorb an increasing labor supply that exceeds demand. The psychological impact of this reality cannot be minimized. The resulting behavior of key sectors of the electorate may generate a new political dynamics. In a non-linear world, these dynamics may shake the tree and force those now sharing power to change course. If this occurs, the present fiscal crisis may prove to be beneficial after all. The business community is by now well aware of the major trends underlying the Commonwealths economy. All point to a meager growth potential at the macroeconomic level of aggregation. Sector behavior will differ. Traditional agriculture continues its long decline. Manufacturing faces difficult times, trade and services are in a better position to exploit opportunities. However, in a no-growth regime, market share becomes a key factor for survival. Competitions will become even fiercer than experienced up to this date. Smart acquisitions, diversification and, as scales permit, expansion to markets
36
outside the island, will become important elements of public and private business strategies. However, the awareness of the trends tends to be general in nature. It has failed to take notice of the profound causes and, most important, of the consequences brought about by these trends. Let us mention some of these important trends and the consequences they will precipitate. The failures of education, the expansion of dependency, and the irruption of the criminal drug business, have created a new dual social structure in Puerto Rico. Agrarianindustrial duality has given way to a duality in attitudes and values. The dual nature of Puerto Ricos social structure has generated cultural attitudes typical of failed communities found in inner cities that have lost their economic function. These cultural attitudes make it impossible for people to contribute anything positive to the economy. Crime destroys wealth. And, as it goes on with the destruction of wealth, the populations living in deprive areas demand increasing resources from taxpayers. The perceived injustice will induce increasing resistance to sustain government and eventually will spark emigration of the tax base. The aging of the population, and of the electorate, will lead to even wider gaps between the expectations electorates have of governments and the governments ability to meet those expectations. Electorates want governments to spend money on services, but are not prepared to vote the funds to pay for these. Such pressures on public finances will continue and only increase in intensity. An aging electorate will pun an even higher priority of public safety and in cutting the incidence of violent crime. Liberal democratic governments are not likely to be able to succeed without a change in attitudes. These are not in the horizon. More and more the key political issue will boil down to the extent that electors are prepared to give up some of the civil liberties which have been won over the last two generations in order to create a more conformist society. The rising average age of the population is the most important force determining future trends in social attitudes. However, there is another important driving force: the proportion of women in the workforce. Women have become the more dynamic segment of Puerto Ricos working population. Their participation in the active population has important influence on other social variables. Participation in work and alienation into the dependency downward spiral, end up reinforcing trends that place a grate social issue on the table: how long the retreat from the marriage contract will continue. The effects on family structure, earnings potential, social mobility, and savings, are crucial to wealth accumulation and prosperity. Immigration and emigration will become once more an important issue to Puerto Rico. This time the emigration of retiring middle class in search for the living conditions, health care, and security perceived lacking in the island will constitute an increasing component of the outflow. The emigration of the most educated and productive young cohorts will further hamper earned incomes, saving and investment. Immigration of undocumented and illegal young people in search for entry into the US jurisdiction will provide an increasing supply of cheaper labor force. This supply will tend to compete at lower unit costs with local resident labor, providing a depressing effect on real wages. Increases in minimum wage, non-productivity bounded bonuses, and legislated fringe benefits will only intensify the temptation for businesses to hire illegal immigrant labor as the gap between the legal unit cost of bona fide residents and undocumented laborers increases. It would be an understatement to say that, given the risks, logical planning options must be conservative. Paradoxically, it is also true that opportunities will arise even under the rigidities of the current economic structure. The non-linearity of the underlying
37
relationships between economic and social forces almost guarantees that opportunities will arise. The failure of government to provide personal and property security has created a huge industry of privatized police, gated communities, and remote sensing security instrument and monitors. A similar revolution is taking place in health care. As technology has advanced, the scarcity of nursing personnel has spurred the implementation of telemetry in hospitals to continuously monitor patients vital signs, to record and then provide summarized reports to physicians in response to queries directed at locating abnormal behaviors during specific time spans. Slowly, egovernment is being tried out as the resistance of unions is being grappled with. Eventually, many services will be contracted out by government under the pressures forced by inefficiency, inefficacy, and financial constraints. Restructuring and modernization will require capital and investment. These processes will provide a growing area for business. In a non-linear world events and crisis will make likely that the following institutional rearrangements would occur. 1. A revamping of the property tax system that will include: i. Separation of land and structures for tax assessments purposes; ii. Market prices established as basis for tax assessments. 2. A value added tax plus a nearly flat income tax rate would substitute the present structure. 3. As the financial crisis of the government retirement systems unfolds: i. Special taxes are earmarked to bailout the systems; ii. Defined benefits are abandoned in all pension systems; iii. Minimum retirement age is extended to 70. 4. Public health issues become critical as the current public system collapses and brings a significant portion of the private system down with it. An overhaul takes place taking as strategic organizing points three critical components of the population: i. The old; ii. The children; iii. The indigent. 5. The public education system becomes one designed basically to provide special education to an ever increasing portion of the young identified in need. The larger portion of the young population receives education from schools run by chartered community organizations in competition for resources and students. 6. The Commonwealth government sheds most of the services now provided directly and contracts out for their provision. 7. Municipal governments establish consortia in order to gain from economies of scale and managerial capabilities only found in minimum size governments. 8. Alternative fuels and hybrid technologies become economically feasible as the price of oil is kept high by a combination of cartel manipulations, fear premiums, federal tax policies and the enactment of congestion pricing for roads ant toll requirements for driving in urban centers. Consumption of gasoline and automobile use stabilize. 9. The beginnings of a true city start taking place along the routes of the metro rail system.
38
10. Disillusionment with, failure of and the new possibilities provided by instant communications, permits political parties or movements to spring up as alternatives to the traditional status oriented political organizations. Among these: i. A green party; ii. A civil society party; iii. A populist party; and iv. Several single-issue movements Hopefully, crisis and the market will bring change and opportunity. In public and private enterprise, however, the key ingredient necessary for the realization of opportunities will be leadership. The true institutional obstacle to adaptation is the political party defining its mission as ideological in nature. When ideology becomes the driving force, all costs are seen as affordable --especially when they are shifted to someone elses shoulders.
39
APENDIX I FINAL DEMAND MODEL STRUCTURE
40
9 Structural Specification System: Xplorah_22

The meaning of the mnemonics can be found on Table 1 in the main body of this report. LOG stands for the logarithm of the values of a variable. Non-linear relationships can be approximately linear by expressing the values in logarithms. The proper interpretations of parameters for such non-linear relationships are elasticities. Elasticity provides important information independent of units of measurement. For instance, coefficient (C12) is the real export elasticity of real imports. (Constant prices values published by the Puerto Rico Planning Board with 1954 as base year, have been translated into 1992 dollars, using the import price deflator with 1992 = 100.) Table 2 of Appendix II lists the estimated values to all parameters in the model. Elasticity C(12) is estimated to have a value of 1.032680. In other words, when real exports increase by 1 percent, real imports tend to increase by 1.03 percent.
9.1 Stochastic Equations

The structure of the model consists of 24 stochastic equations and identities that serve as accounting equations. The equations are linear in the logarithms of the variables.
1. LOG(IMPORR) = C(11)+C(12)*LOG(EXPORR) + C(13)*LOG(CNDR)+C(14)*LOG(CDR)+C(13)*LOG(IR) 2. LOG(CNDR) = C(21)+C(23)*LOG(YDISPR) 3. LOG(EXPORR) = C(31)+C(32)*LOG(IFIXPLEPRR(-1))+C(33)*RGGDPUSR(1)+C(34)*LOG((GDP_MAN)/(IMPORINDX_92/100)) 4. LOG(POP)=C(41)+C(42)*TIME+C(43)*LOG(POP(-1))+C(44)*LOG(HOUSING_STOCK(1))+C(45)*LOG(EMPLOYMENT(-1)) 5. LOG(CSR) = C(51)+C(52)*LOG(POP(-1))+C(53)*LOG(underground_index) 6. LOG(YDISPR) = C(61)+C(62)*LOG(PRODUCTIVITY(-1))+ C(63)*LOG(USTRPR) 7. LOG(CDR) = C(71)+C(72)*LOG(EMPLOYMENT(1))+C(73)*LOG(YDISPR)+C(74)*LOG(NUVIVPRI(-1)) 8. LOG(IFIXCPRR) = C(91)+C(92)*LOG(IFIXGR(-1)) +C(93)*RGGDPUSR(1)+C(94)*FRMCPR(-1) 9. LOG(IFIXPLEPRR) = C(101)+C(102)*LOG(CDR(-1))+C(103)*(FRMCPR(1))+C(104)*LOG(pp_venezuela) 10. LOG(PRODUCTIVITY) = C(111)+C(112)*LOG(IFIXPLEPRR(1))+C(113)*LOG((pp_venezuela)/(IMPORINDX_92/100))+C(114)*TIME 11. LOG(WEALTH_FAM) = C(131)+C(132)*LOG(HOUSING_STOCK(1))+C(133)*LOG(YDISPR(-1))+C(134)*LOG(EMPLOYMENT)+C(135)*LOG(IPDCONS)
41
12. LOG(FAMILIES) = C(261) + C(262)*LOG(POP(-1)) + C(263)*(P_PER_FAM) 13. LOG(IPDCONS) = C(271)*LOG(IMPORINDX_92) + C(272)*LOG(pp_venezuela) 14. LOG(NUVIVPRI) = C(121)+C(122)*DEY+C(123)*LOG(HOUSING_STOCK(1))+C(124)*LOG(WEALTH_FAM(-1))+C(125)*MORTG_30(1)+C(126)*LOG(IPDCONS)+c(127)*log(underground_index)+C(128)*LOG(FAMILIES) 15. LOG(((GDP_AG)/((IMPORINDX_92)/100))) = C(141) + C(142)*LOG(EMP_AG)+C(143)*LOG(PRODUCTIVITY(-1)) 16. LOG((GDP_SERV)/(IMPORINDX_92/100)) = C(151) + C(152)*LOG(EMP_SERV) +C(153)*LOG(YDISPR)+C(154)*LOG(PRODUCTIVITY(-1)) 17. LOG((GDP_GOV)/(IMPORINDX_92/100)) = C(161) + C(162)*LOG(EMP_GOV) + C(163)*LOG(USTRPR) 18. OG((GDP_MAN)/(IMPORINDX_92/100)) = C(171) +C(172)*LOG(PRODUCTIVITY(1))+C(173)*LOG(IFIXPLEPRR(-1))+[ar (1)=C(174)] 19. LOG((GDP_CONST)/(IMPORINDX_92/100)) = C(181) + C(182)*DH +C(184)*LOG(EMP_CONST)+ C(183)*LOG(IFIXGR(-1)) 20. LOG(EMP_AG) = C(191)+C(192)*LOG(IMPORR) +C(193)*LOG(HOUSING_STOCK(-1)) 21. LOG(EMP_CONST) = C(201) + C(202)*LOG((GDP_CONST)/(IMPORINDX_92/100))+C(203)*LOG(CGR) + C(204)*LOG(PRODUCTIVITY(-1))+C(205)*LOG(NUVIVPRI) 22. LOG(EMP_SERV) = C(211) + C(212)*LOG(YDISPR)+C(213)*LOG(HOUSING_STOCK(1))+C(214)*LOG(CNDR)+C(215)*LOG(EXPORR)+C(216)*Log(underground_index)+C(217)* LOG(EMP_CONST) + C(218)* LOG(CSR) 23. LOG(EMP_MAN) = C(241) +C(242)*LOG(PRODUCTIVITY)+ C(243)*LOG(EMP_SERV)+C(244)*(D936)+C(246)*(man_us_cap_util_indx)+ [AR(1)=C(248), AR(2)=C(249)] 24. NFP = C(231)+C(232)*(D936)+C(233)*(GDP_MAN)
9.2 Identities
The accounting and stock adjustment equations are listed below.
25. CER = CDR + CNDR + CSR 26. cer_total = cer + cgr 27. ifixcr = ifixgr_c + ifixcprr 28. ifixpler = ifixgr_m + ifixpleprr 29. ir = ifixr + iprchir
42
30. ifixr = ifixcr + ifixpler 31. ifixgr = ifixgr_c + ifixgr_m 32. GDPR = GDP_AG / (IMPORINDX_92 / 100) + GDP_CONST / (IMPORINDX_92 / 100) + GDP_SERV / (IMPORINDX_92 / 100) + GDP_MAN / (IMPORINDX_92 / 100) + GDP_GOV / (IMPORINDX_92 / 100) + (NFP / (IMPORINDX_92 / 100)) 33. GNPR = cer_total + ir + exporr - imporr 34. aggregate_demand = GNPR + imporr 35. employment = EMP_AG + EMP_CONST + EMP_SERV + EMP_MAN + EMP_GOV 36. pop_active = ((employment) / pop) 37. share_gov_ad = ((cgr + ifixgr_c) / (aggregate_demand)) 38. HOUSING_STOCK = HOUSING_STOCK(-1) + (NUVIVPRI + NUVIVPU) - (1 / 100000) * HOUSING_STOCK(-1) + nuviv_unaccounted
43
APENDIX II ECONOMETRIC ESTIMATION RESULTS
44
10 Structural Coefficients
Table 2 Estimation Output 3SLS
System: XPLORAH_22 Estimation Method: Three-Stage Least Squares Date: 04/05/08 Time: 21:11 Sample: 1972 2007 Included observations: 37 Total system (unbalanced) observations 862 Iterate coefficients after one-step weighting matrix Convergence achieved after: 1 weight matrix, 18 total coefficient iterations Coefficient C(11) C(12) C(13) C(14) C(21) C(23) C(31) C(32) C(33) C(34) C(41) C(42) C(43) C(44) C(45) C(51) C(52) C(53) C(61) C(62) C(63) C(71) C(72) C(73) C(74) C(91) C(92) C(93) 0.825647 0.739544 0.092827 0.057269 2.887023 0.632211 0.107864 -0.008541 0.011846 1.058344 1.678227 0.002441 0.472785 0.214031 -0.063112 -1.155611 1.139856 0.747590 4.908155 0.990649 0.152848 3.986223 -1.253863 1.434642 -0.179197 -1.185536 1.201289 0.014091 Std. Error 0.088929 0.008368 0.007521 0.016853 0.129466 0.013045 0.264874 0.037400 0.003626 0.045700 0.427169 0.000802 0.072290 0.034591 0.030168 1.151417 0.146983 0.046734 0.196080 0.030654 0.026954 0.665694 0.294031 0.171417 0.035717 0.520593 0.069190 0.005652 t-Statistic 9.284351 88.37822 12.34270 3.398058 22.29940 48.46236 0.407227 -0.228361 3.266701 23.15856 3.928718 3.042151 6.540071 6.187575 -2.092024 -1.003643 7.754993 15.99669 25.03144 32.31681 5.670686 5.988069 -4.264396 8.369303 -5.017188 -2.277281 17.36230 2.492888 Prob. 0.0000 0.0000 0.0000 0.0007 0.0000 0.0000 0.6840 0.8194 0.0011 0.0000 0.0001 0.0024 0.0000 0.0000 0.0368 0.3159 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0230 0.0000 0.0129
45
C(94) C(101) C(102) C(103) C(104) C(111) C(112) C(113) C(114) C(131) C(132) C(133) C(134) C(135) C(261) C(262) C(263) C(271) C(272) C(121) C(122) C(123) C(124) C(125) C(126) C(127) C(128) C(141) C(142) C(143) C(151) C(152) C(153) C(154) C(161) C(162) C(163) C(171) C(172) C(173) C(174) C(181) C(182) C(184) C(183) C(191) C(192)
-0.057853 -7.236767 1.885516 -0.055512 0.093409 1.747774 0.203714 -0.033041 0.016533 -12.72087 1.634275 -0.309200 0.282258 0.499638 10.88282 0.514617 -0.358726 1.028096 -0.044600 -1.359541 -0.085475 1.053721 0.533488 -0.024781 -2.397086 1.118881 -0.019896 5.085808 0.603006 -0.318687 -0.139672 1.324195 0.108745 0.092023 6.986208 0.963684 -0.389176 12.05701 0.126693 -0.032599 0.984724 -2.594992 -0.149487 0.346967 1.072664 17.71920 -0.076842
0.005519 0.843868 0.104829 0.006841 0.031599 0.103673 0.015321 0.007630 0.000963 3.266249 0.344327 0.105591 0.208483 0.135227 0.271015 0.029366 0.008472 0.004231 0.005825 12.54315 0.027717 1.436876 0.177760 0.014445 0.523610 0.195254 0.692478 0.433902 0.064202 0.068532 0.270733 0.061199 0.061869 0.050274 0.211160 0.043093 0.039594 2.183742 0.098013 0.036355 0.010672 0.515349 0.029688 0.075500 0.050423 1.536988 0.084066
-10.48315 -8.575709 17.98668 -8.114323 2.956015 16.85846 13.29607 -4.330353 17.17657 -3.894643 4.746294 -2.928286 1.353867 3.694814 40.15571 17.52445 -42.34158 242.9666 -7.656323 -0.108389 -3.083826 0.733341 3.001167 -1.715508 -4.578000 5.730386 -0.028732 11.72111 9.392335 -4.650196 -0.515904 21.63740 1.757676 1.830418 33.08490 22.36274 -9.829260 5.521261 1.292617 -0.896679 92.27436 -5.035408 -5.035235 4.595565 21.27345 11.52852 -0.914073
0.0000 0.0000 0.0000 0.0000 0.0032 0.0000 0.0000 0.0000 0.0000 0.0001 0.0000 0.0035 0.1762 0.0002 0.0000 0.0000 0.0000 0.0000 0.0000 0.9137 0.0021 0.4636 0.0028 0.0867 0.0000 0.0000 0.9771 0.0000 0.0000 0.0000 0.6061 0.0000 0.0792 0.0676 0.0000 0.0000 0.0000 0.0000 0.1965 0.3702 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.3610
46
C(193) C(201) C(202) C(203) C(204) C(205) C(211) C(212) C(213) C(214) C(215) C(216) C(217) C(218) C(241) C(242) C(243) C(244) C(246) C(248) C(249) C(231) C(232) C(233)
-0.960593 -1.390418 -0.154571 0.643363 -0.262867 0.217124 0.361496 -0.160617 0.321268 0.085485 -0.021345 0.269521 -0.064220 0.256126 5.278141 0.236093 -0.248193 0.052924 0.004072 0.802483 -0.111668 1519.792 -29.84286 -0.893222
0.167211 0.872007 0.060279 0.152448 0.167044 0.059176 0.501761 0.041068 0.038288 0.038741 0.016329 0.021389 0.009291 0.038186 0.515795 0.075491 0.111204 0.011567 0.001481 0.127861 0.129029 120.9286 49.23183 0.004594 7.91E-64
-5.744783 -1.594502 -2.564259 4.220205 -1.573637 3.669137 0.720455 -3.910981 8.390761 2.206581 -1.307205 12.60088 -6.912202 6.707363 10.23303 3.127435 -2.231874 4.575558 2.749762 6.276224 -0.865450 12.56769 -0.606170 -194.4382
0.0000 0.1112 0.0105 0.0000 0.1160 0.0003 0.4715 0.0001 0.0000 0.0276 0.1915 0.0000 0.0000 0.0000 0.0000 0.0018 0.0259 0.0000 0.0061 0.0000 0.3871 0.0000 0.5446 0.0000
Determinant residual covariance
Equation: LOG(IMPORR) = C(11)+C(12)*LOG(EXPORR) + C(13) *LOG(CNDR)+C(14)*LOG(CDR)+C(13)*LOG(IR) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.997633 Mean dependent var 10.33128 Adjusted R-squared 0.997411 S.D. dependent var 0.479163 S.E. of regression 0.024381 Sum squared resid 0.019023 Durbin-Watson stat 1.111326 Equation: LOG(CNDR) = C(21)+C(23)*LOG(YDISPR) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1)
47
LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.980633 Mean dependent var 9.158334 Adjusted R-squared 0.980064 S.D. dependent var 0.217335 S.E. of regression 0.030687 Sum squared resid 0.032017 Durbin-Watson stat 0.692864 Equation: LOG(EXPORR) = C(31)+C(32)*LOG(IFIXPLEPRR(-1))+C(33) *RGGDPUSR(-1)+C(34)*LOG((GDP_MAN)/(IMPORINDX_92/100)) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.974369 Mean dependent var 10.01548 Adjusted R-squared 0.971966 S.D. dependent var 0.558299 S.E. of regression 0.093478 Sum squared resid 0.279622 Durbin-Watson stat 0.750212 Equation: LOG(POP)=C(41)+C(42)*TIME+C(43)*LOG(POP(-1))+C(44) *LOG(HOUSING_STOCK(-1))+C(45)*LOG(EMPLOYMENT(-1)) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.997205 Mean dependent var 8.193637 Adjusted R-squared 0.996844 S.D. dependent var 0.124786 S.E. of regression 0.007010 Sum squared resid 0.001523 Durbin-Watson stat 1.622631
48
Equation: LOG(CSR) = C(51)+C(52)*LOG(POP(-1))+C(53) *LOG(UNDERGROUND_INDEX) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.975620 Mean dependent var 9.040120 Adjusted R-squared 0.974143 S.D. dependent var 0.461228 S.E. of regression 0.074166 Sum squared resid 0.181520 Durbin-Watson stat 0.615919 Equation: LOG(YDISPR) = C(61)+C(62)*LOG(PRODUCTIVITY(-1))+ C(63)*LOG(USTRPR) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.976443 Mean dependent var 9.920143 Adjusted R-squared 0.975015 S.D. dependent var 0.335221 S.E. of regression 0.052987 Sum squared resid 0.092651 Durbin-Watson stat 1.203399 Equation: LOG(CDR) = C(71)+C(72)*LOG(EMPLOYMENT(-1))+C(73) *LOG(YDISPR)+C(74)*LOG(NUVIVPRI(-1)) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36
49
R-squared Adjusted R-squared S.E. of regression Durbin-Watson stat
0.886474 0.875831 0.089475 0.754968
Mean dependent var S.D. dependent var Sum squared resid
7.948479 0.253920 0.256187
Equation: LOG(IFIXCPRR) = C(91)+C(92)*LOG(IFIXGR(-1)) +C(93) *RGGDPUSR(-1)+C(94)*FRMCPR(-1) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.836068 Mean dependent var 7.212397 Adjusted R-squared 0.820700 S.D. dependent var 0.580060 S.E. of regression 0.245620 Sum squared resid 1.930532 Durbin-Watson stat 0.927907 Equation: LOG(IFIXPLEPRR) = C(101)+C(102)*LOG(CDR(-1))+C(103) *(FRMCPR(-1))+C(104)*LOG(PP_VENEZUELA) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.881995 Mean dependent var 7.507635 Adjusted R-squared 0.870932 S.D. dependent var 0.624205 S.E. of regression 0.224252 Sum squared resid 1.609250 Durbin-Watson stat 0.930430 Equation: LOG(PRODUCTIVITY) = C(111)+C(112)*LOG(IFIXPLEPRR( -1))+C(113)*LOG((PP_VENEZUELA)/(IMPORINDX_92/100)) +C(114)*TIME Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY
50
D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.976901 Mean dependent var 3.756268 Adjusted R-squared 0.974736 S.D. dependent var 0.299365 S.E. of regression 0.047583 Sum squared resid 0.072454 Durbin-Watson stat 0.750714 Equation: LOG(WEALTH_FAM) = C(131)+C(132)*LOG(HOUSING_STO CK(-1))+C(133)*LOG(YDISPR(-1))+C(134)*LOG(EMPLOYMENT) +C(135)*LOG(IPDCONS) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.975721 Mean dependent var 11.23357 Adjusted R-squared 0.972588 S.D. dependent var 0.547401 S.E. of regression 0.090631 Sum squared resid 0.254632 Durbin-Watson stat 0.640153 Equation: LOG(FAMILIES) = C(261) + C(262)*LOG(POP(-1)) + C(263) *(P_PER_FAM) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.998416 Mean dependent var 13.72339 Adjusted R-squared 0.998320 S.D. dependent var 0.221541 S.E. of regression 0.009081 Sum squared resid 0.002721 Durbin-Watson stat 0.881590 Equation: LOG(IPDCONS) = C(271)*LOG(IMPORINDX_92) + C(272) *LOG(PP_VENEZUELA)
51
Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.985853 Mean dependent var 4.461905 Adjusted R-squared 0.985437 S.D. dependent var 0.397281 S.E. of regression 0.047942 Sum squared resid 0.078148 Durbin-Watson stat 0.398363 Equation: LOG(NUVIVPRI) = C(121)+C(122)*DEY+C(123) *LOG(HOUSING_STOCK(-1))+C(124)*LOG(WEALTH_FAM(-1)) +C(125)*MORTG_30(-1)+C(126)*LOG(IPDCONS)+C(127) *LOG(UNDERGROUND_INDEX)+C(128)*LOG(FAMILIES) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.803686 Mean dependent var 9.421759 Adjusted R-squared 0.754608 S.D. dependent var 0.331785 S.E. of regression 0.164356 Sum squared resid 0.756365 Durbin-Watson stat 0.980022 Equation: LOG(((GDP_AG)/((IMPORINDX_92)/100))) = C(141) + C(142) *LOG(EMP_AG)+C(143)*LOG(PRODUCTIVITY(-1)) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.835627 Mean dependent var 6.001924
52
Adjusted R-squared S.E. of regression Durbin-Watson stat
0.825665 0.114159 1.694265
S.D. dependent var Sum squared resid
0.273411 0.430063
Equation: LOG((GDP_SERV)/(IMPORINDX_92/100)) = C(151) + C(152)*LOG(EMP_SERV) +C(153)*LOG(YDISPR)+C(154) *LOG(PRODUCTIVITY(-1)) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.993912 Mean dependent var 9.490499 Adjusted R-squared 0.993341 S.D. dependent var 0.396647 S.E. of regression 0.032366 Sum squared resid 0.033523 Durbin-Watson stat 1.160217 Equation: LOG((GDP_GOV)/(IMPORINDX_92/100)) = C(161) + C(162) *LOG(EMP_GOV) + C(163)*LOG(USTRPR) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.930848 Mean dependent var 8.818553 Adjusted R-squared 0.926657 S.D. dependent var 0.219279 S.E. of regression 0.059385 Sum squared resid 0.116376 Durbin-Watson stat 0.608531 Equation: LOG((GDP_MAN)/(IMPORINDX_92/100)) = C(171) +C(172) *LOG(PRODUCTIVITY(-1))+C(173)*LOG(IFIXPLEPRR(-1))+[AR (1)=C(174)] Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY
53
D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C LOG((GDP_MAN(-1))/(IMPORINDX_92(-1) /100)) LOG(PRODUCTIVITY(-2)) LOG(IFIXPLEPRR(-2)) Observations: 35 R-squared 0.995879 Mean dependent var 9.413123 Adjusted R-squared 0.995480 S.D. dependent var 0.509492 S.E. of regression 0.034255 Sum squared resid 0.036375 Durbin-Watson stat 2.335175 Equation: LOG((GDP_CONST)/(IMPORINDX_92/100)) = C(181) + C(182)*DH +C(184)*LOG(EMP_CONST)+ C(183)*LOG(IFIXGR(-1)) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.832016 Mean dependent var 6.705389 Adjusted R-squared 0.816268 S.D. dependent var 0.444556 S.E. of regression 0.190555 Sum squared resid 1.161954 Durbin-Watson stat 0.741708 Equation: LOG(EMP_AG) = C(191)+C(192)*LOG(IMPORR) +C(193) *LOG(HOUSING_STOCK(-1)) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.898100 Mean dependent var 3.495357 Adjusted R-squared 0.891925 S.D. dependent var 0.278949 S.E. of regression 0.091704 Sum squared resid 0.277517 Durbin-Watson stat 0.680583 Equation: LOG(EMP_CONST) = C(201) + C(202)*LOG((GDP_CONST)
54
/(IMPORINDX_92/100))+C(203)*LOG(CGR) + C(204) *LOG(PRODUCTIVITY(-1))+C(205)*LOG(NUVIVPRI) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.513436 Mean dependent var 4.043635 Adjusted R-squared 0.450653 S.D. dependent var 0.205588 S.E. of regression 0.152377 Sum squared resid 0.719785 Durbin-Watson stat 1.833727 Equation: LOG(EMP_SERV) = C(211) + C(212)*LOG(YDISPR)+C(213) *LOG(HOUSING_STOCK(-1))+C(214)*LOG(CNDR)+C(215) *LOG(EXPORR)+C(216)*LOG(UNDERGROUND_INDEX)+C(217) *LOG(EMP_CONST) + C(218)* LOG(CSR) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.997302 Mean dependent var 6.198507 Adjusted R-squared 0.996628 S.D. dependent var 0.247082 S.E. of regression 0.014349 Sum squared resid 0.005765 Durbin-Watson stat 1.726389 Equation: LOG(EMP_MAN) = C(241) +C(242)*LOG(PRODUCTIVITY)+ C(243)*LOG(EMP_SERV)+C(244)*(D936)+C(246) *(MAN_US_CAP_UTIL_INDX)+ [AR(1)=C(248), AR(2)=C(249)] Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX)
55
LOG(EMP_GOV) C LOG(EMP_MAN(-1)) LOG(EMP_SERV(-1)) D936(-1) MAN_US_CAP_UTIL_INDX(-1) LOG(EMP_MAN(-2)) Observations: 35 R-squared 0.772154 Mean dependent var 5.017117 Adjusted R-squared 0.723330 S.D. dependent var 0.064013 S.E. of regression 0.033671 Sum squared resid 0.031744 Durbin-Watson stat 1.888325 Equation: NFP = C(231)+C(232)*(D936)+C(233)*(GDP_MAN) Instruments: LOG(IFIXGR(-1)) LOG(PP_VENEZUELA) RGGDPUSR(-1) LOG(USTRPR) LOG(USTRPR(-1)) FRMCPR(-1) LOG(PRODUCTIVITY(-1)) MORTG_30(-1) TIME LOG(POP(-1)) LOG(EMPLOYMENT(-1)) LOG(CGR) IMPORINDX_92/100 LOG(IFIXGR_C) LOG(IFIXGR_M) LOG(IFIXPLEPRR(-1)) DEY D936 DH D911 P_PER_FAM NUVIVPU LOG(WEALTH_FAM(-1)) MAN_US_CAP_UTIL_INDX LOG(YDISPR(-1)) LOG(HOUSING_ST OCK(-1)) LOG(NUVIVPRI(-1)) LOG(UNDERGROUND_INDEX) LOG(EMP_GOV) C Observations: 36 R-squared 0.998754 Mean dependent var -11596.66 Adjusted R-squared 0.998679 S.D. dependent var 9948.038 S.E. of regression 361.6157 Sum squared resid 4315275. Durbin-Watson stat 1.460551
The figures that are included herewith illustrate the historical series and the confidence bounds around the calculated values generated by the model. These calculated values are obtained by solving the model and letting the system replicate the historical trajectory of the series. The wider the band delimited by these confidence bounds, the lower the forecast confidence.
56
Figure 7
Accelerated Public Investment & Moderate Inflation Real Fixed Public Investment 2 S.E. 2800 2400 2000 1600 1200 800 400 75 80 85 90 95 00 05 10 15 20 25 Real Fixed Domestic Investment Plant and Equipment 2 S.E. 12000 10000 8000 6000 4000 2000 0 -2000 -4000 75 80 85 90 95 00 05 10 15 20 25
Real Fixed Domestic Investment Construction 2 S.E. 7000 6000 5000 4000 8000 3000 2000 1000 0 75 80 85 90 95 00 05 10 15 20 25 0 75 4000 12000 16000
Real Fixed Domestic Investment 2 S.E.
80
85
90
95
00
05
10
15
20
25
57
Figure 8
Accelerated Public Investment & Moderate Inflation Gross Domestic Product Agriculture 2 S.E. 600 500 400 300 200 100 75 80 85 90 95 00 05 10 15 20 25 2500 2000 1500 20000 1000 500 0 75 80 85 90 95 00 05 10 15 20 25 10000 Gross Domestic Product Construction and Mining 2 S.E. 40000 Gross Domestic Product Services 2 S.E.
30000
0 75 80 85 90 95 00 05 10 15 20 25
Gross Domestic Product Construction and Mining (Accelerated Public Investment & Moderate Inflation Mean) Gross Domestic Product Government 2 S.E. 16000 14000 12000 10000 8000 6000 4000 2000 0 75 80 85 90 95 00 05 10 15 20 25 -2000000 -3000000 75 80 85 90 95 00 05 10 15 20 25 1000000 0 -1000000 3000000 2000000 Gross Domestic Product Manufacturing 2 S.E.
Figure 9
Number of New Private Housing Units Unadjusted for Unaccounted 2 S.E. (Accelerated Public Investment & Moderate Inflation) 35000 30000 25000 20000 15000 10000 5000 0 75 80 85 90 95 00 05 10 15 20 25
Number of New Private Housing Units Unadjusted for Unaccounted (Accelerated Public Investment & Moderate Inflation Mean)
58
Figure 10
Employment in Agriculture 2 S.E. (Accelerated Public Investment & Moderate Inflation) 80 70 60 50 40 30 20 10 75 80 85 90 95 00 05 10 15 20 25
Employment in Agriculture (Accelerated Public Investment & Moderate Inflation Mean)
Figure 12
Employment in Services 2 S.E. (Accelerated Public Investment & Moderate Inflation) 900 800 700 600 500 400 300 200 75 80 85 90 95 00 05 10 15 20 25
Employment in Services (Accelerated Public Investment & Moderate Inflation Mean)
59
Figure 13
Employment in Construction 2 S.E. (Accelerated Public Investment & Moderate Inflation) 100 90 80 70 60 50 40 30 20 75 80 85 90 95 00 05 10 15 20 25
Employment in Construction (Accelerated Public Investment & Moderate Inflation Mean)
Figure 14
Employment in Manufacturing 2 S.E. (Accelerated Public Investment & Moderate Inflation) 190 180 170 160 150 140 130 120 110 75 80 85 90 95 00 05 10 15 20 25
Employment in Manufacturing (Accelerated Public Investment & Moderate Inflation Mean)
60
Figure 15
Accelerated Public Investment & Moderate Inflation Real Aggregate Demand in Constant Prices 1992 Import Prices 2 S.E. 6000000 4000000 2000000 0 -2000000 -4000000 75 1400 1300 1200 1100 1000 900 800 700 600 75 80 85 90 95 00 05 10 15 20 25 80 85 90 95 00 05 10 15 20 25 Total Employment (in thousands) 2 S.E.
61
Figure 16
Housing Stock Consistent With Decenial Census Data 2 S.E. (Accelerated Public Investment & Moderate Inflation) 1800000 1600000 1400000 1200000 1000000 800000 600000 75 80 85 90 95 00 05 10 15 20 25
62
Table 2 Endogenous Variables 2008 2025 Under Two Scenarios

2008 Real Imports deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Non-durables Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Exports deflated by Imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Population Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Disposable Personal Income Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Durables Accelerated Public Investment & Moderate Inflation 61840 61665 0.28 12775 12775 0.0 51732 51732 0.00 4330.9 4330.9 0.00 16926 16926 0.00 32508 32508 0.0 3533.7 2009 64089 63878 0.33 12615 12655 -0.3 53451 53487 -0.07 4378.5 4375.7 0.07 17637 17637 0.00 31869 32030 -0.5 3400.1 2010 65588 65388 0.31 12800 12853 -0.4 55128 55178 -0.09 4426.2 4417.9 0.19 18379 18366 0.08 32610 32826 -0.7 3366.5 2011 68858 68082 1.14 13306 13375 -0.5 57517 57224 0.51 4473.9 4458.3 0.35 19150 19109 0.21 34673 34957 -0.8 3602.5 2012 71683 71153 0.74 13255 13585 -2.4 60116 59973 0.24 4523.5 4498.6 0.55 19951 19872 0.40 34463 35828 -3.8 3507.0
63
Stagnant Public Investment & High Inflation % Deviation Real Fixed Private Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Private Investment Machinery Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Millions of GDP in 1992 prices per 1000 non-government employee Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Perceived Value of Families Wealth Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Families Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Implicit Deflator Construction (1992=100) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Private Housing Units Unadjusted for Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Agriculture
3534 0.0 2144 2144.4 0.0 3248.5 3248 0.0 63.2 63.5 -0.5 150706 163007 -7.5 1249731 1249731 0.00 135.1 158.2 -14.6 18081 12389 46.0
3670 -7.4 2657 2347.4 13.2 3903.6 3904 0.0 64.4 64.8 -0.7 155326 171178 -9.3 1256770 1256770 0.00 137.4 169.0 -18.7 20537 12993 58.1
3699 -9.0 2784 2160.5 28.8 3392.1 3919 -13.4 68.2 68.7 -0.8 164004 183577 -10.7 1263869 1263440 0.03 140.8 181.9 -22.6 20800 11758 76.9
4052 -11.1 3378 2317.5 45.8 3512.0 4194 -16.3 67.5 70.2 -3.8 170257 193572 -12.0 1270923 1269703 0.10 143.8 195.2 -26.3 21533 10849 98.5
4209 -16.7 3777 2276.1 65.9 3881.4 4844 -19.9 69.1 72.5 -4.6 174751 201395 -13.2 1277962 1275669 0.18 146.8 209.2 -29.9 19928 8942 122.9
64
Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Manufacturing Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Construction and Mining Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Agriculture Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
407.4 475.0 -14.2 34374 40340 -14.8 13511 15752 -14.2 38334 44690 -14.2 1812 2056.7 -11.9 23.0 23.0 -0.0 69.2 64.0 8.1 717.6 721.2 -0.50
413.7 506.2 -18.3 36167 44478 -18.7 13624 16662 -18.2 40243 49247 -18.3 2074 2209.5 -6.1 22.5 22.6 -0.4 70.8 65.4 8.3 737.1 739.6 -0.34
414.3 532.9 -22.3 38281 49313 -22.4 13738 17624 -22.1 42232 54226 -22.1 2318 2302.3 0.7 22.0 22.2 -0.8 70.1 64.3 9.0 755.5 757.1 -0.21
409.4 554.0 -26.1 40621 54797 -25.9 13852 18642 -25.7 44988 60324 -25.4 2664 2479.3 7.5 21.6 21.8 -1.3 68.8 62.6 9.9 771.4 771.8 -0.05
413.6 583.3 -29.1 42940 60757 -29.3 13968 19719 -29.2 47220 66609 -29.1 3010 2604.1 15.6 21.1 21.5 -1.9 67.2 60.2 11.5 793.5 790.2 0.42
65
Employment in Manufacturing Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Net Factor Payments to Foreing Residents Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal Consumption Expenditures deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal plus Government Consumption Expenditures Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Plant and Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Investment, total Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
140.8 140.8 0.00 -32721 -38398 -14.8 33234 33234 0.0 40267 40267 0.0 4386 4146.2 5.8 3457.0 3457 0.0 7993 7753 3.1 7843 7603
141.0 141.1 -0.07 -34426 -42469 -18.9 33653 33963 -0.9 40756 41066 -0.8 5168 4349.2 18.8 4069.7 4070 0.0 9388 8569 9.6 9238 8419
142.5 142.7 -0.14 -36203 -46916 -22.8 34546 34918 -1.1 41720 42092 -0.9 5596 4162.4 34.4 3590.8 4117 -12.8 9337 8430 10.8 9187 8280
141.1 142.4 -0.91 -38665 -52363 -26.2 36059 36536 -1.3 43304 43782 -1.1 6528 4319.3 51.1 3699.8 4381 -15.6 10377 8851 17.3 10227 8701
137.9 139.6 -1.22 -40658 -57977 -29.9 36713 37665 -2.5 44031 44984 -2.1 7305 4277.9 70.8 4029.8 4993 -19.3 11485 9421 21.9 11335 9271
66
% Deviation Real Fixed Public Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Gross Domestic Product deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Gross National Product in 1992 prices deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Aggregate Demand in Constant Prices 1992 Import Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Total Employment (in thousands) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Total Population Employed Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Government to Non-Government Aggregate Demand Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Housing Stock Consistent With Decenial Census Data Accelerated Public Investment & Moderate Inflation
3.2 2451 2210.4 10.9 38741 38716 0.1 38153 38088 0.2 99993 99753 0.24 1283.6 1282.0 0.12 0.30 0.30 0.12 0.09 0.091 2.4 1655263
9.7 2677 2168.0 23.5 39603 39371 0.6 39506 39245 0.7 103595 103122 0.46 1304.3 1301.6 0.21 0.30 0.30 0.14 0.09 0.088 5.1 1688153
11.0 3011 2200.5 36.8 40621 40154 1.2 40597 40311 0.7 106185 105699 0.46 1323.2 1319.3 0.29 0.30 0.30 0.10 0.09 0.087 8.3 1720659
17.5 3338 2189.5 52.4 41848 41107 1.8 42341 41775 1.4 111199 109857 1.22 1335.8 1331.7 0.31 0.30 0.30 -0.04 0.09 0.084 11.1 1753945
22.3 3676 2150.2 71.0 42970 41995 2.3 43949 43225 1.7 115632 114378 1.10 1352.7 1344.5 0.61 0.30 0.30 0.05 0.09 0.081 15.1 1785649
67
Stagnant Public Investment & High Inflation % Deviation
1649570 0.3 2013
1674916 0.8 2014 77572 76746 1.08 13857 14371 -3.6 64967 64513 0.70 4621.4 4575.5 1.00 21661 21475 0.87 36973 39164 -5.6 3714.9 4804
1698381 1.3 2015 78495 77899 0.77 13908 14665 -5.2 65313 64896 0.64 4671.5 4612.3 1.28 22566 22311 1.14 37184 40437 -8.0 3653.2 5023
1720983 1.9 2016 79810 79274 0.68 14216 15136 -6.1 65929 65441 0.75 4721.7 4647.8 1.59 23512 23172 1.46 38496 42512 -9.4 3722.8 5369
1741702 2.5 2017 84505 83955 0.65 14469 15563 -7.0 69627 68918 1.03 4771.8 4682.4 1.91 24493 24057 1.81 39586 44426 -10.9 3840.5 5813
Real Imports deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Non-durables Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Exports deflated by Imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Population Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Disposable Personal Income Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Durables Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
74477 73862 0.83 13497 13904 -2.9 62622 62424 0.32 4572.1 4537.7 0.76 20792 20662 0.63 35462 37171 -4.6 3647.0 4539
68
% Deviation Real Fixed Private Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Private Investment Machinery Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Millions of GDP in 1992 prices per 1000 non-government employee Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Perceived Value of Families Wealth Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Families Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Implicit Deflator Construction (1992=100) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Private Housing Units Unadjusted for Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Agriculture Accelerated Public Investment & Moderate Inflation
-19.6 4168 2188.1 90.5 3588.6 5062 -29.1 71.8 76.1 -5.6 182799 211698 -13.7 1285226 1281585 0.28 149.8 224.3 -33.2 22907 9145 150.5 413.6
-22.7 4732 2179.8 117.1 3863.5 5836 -33.8 71.8 78.2 -8.1 189500 221596 -14.5 1292318 1287301 0.39 152.9 240.5 -36.4 24052 8490 183.3 411.5
-27.3 5325 2185.3 143.7 4020.6 6527 -38.4 74.1 81.9 -9.5 195646 230450 -15.1 1299474 1292820 0.51 155.6 257.2 -39.5 25464 7962 219.8 414.8
-30.7 5904 2129.5 177.2 3914.2 7136 -45.1 75.8 85.2 -11.0 204277 240919 -15.2 1306706 1298156 0.66 158.5 275.1 -42.4 24221 6694 261.8 413.9
-33.9 7311 2319.1 215.2 4287.6 8552 -49.9 76.7 88.4 -13.2 211225 250347 -15.6 1313905 1303281 0.82 161.7 294.9 -45.1 27381 6669 310.5 413.5
69
Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Manufacturing Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Construction and Mining Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Agriculture Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Manufacturing
612.3 -32.5 45245 67016 -32.5 14084 20858 -32.5 49652 73446 -32.4 2970 2375.7 25.0 20.7 21.2 -2.4 69.6 61.9 12.4 809.9 804.2 0.71
639.8 -35.7 48009 74429 -35.5 14201 22063 -35.6 52579 81372 -35.4 3910 2909.0 34.4 20.2 20.9 -3.1 67.4 59.3 13.6 829.4 820.9 1.04
673.7 -38.4 50746 82414 -38.4 14320 23337 -38.6 55123 89591 -38.5 4540 3177.3 42.9 19.9 20.7 -3.9 67.3 58.2 15.5 851.6 838.6 1.55
705.5 -41.3 53864 91505 -41.1 14439 24685 -41.5 58042 98921 -41.3 5156 3359.0 53.5 19.5 20.4 -4.7 65.3 55.9 16.9 873.3 856.0 2.01
739.1 -44.1 56870 101078 -43.7 14559 26111 -44.2 61168 109172 -44.0 5936 3600.1 64.9 19.0 20.1 -5.5 65.9 55.6 18.5 892.8 871.3 2.47
70
Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Net Factor Payments to Foreign Residents Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal Consumption Expenditures deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal plus Government Consumption Expenditures Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Plant and Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Investment, total Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
137.3 139.4 -1.54 -42831 -64084 -33.2 37936 39105 -3.0 45327 46496 -2.5 8119 4189.9 93.8 3737.7 5211 -28.3 12007 9551 25.7 11857 9401 26.1
138.3 141.5 -2.23 -45445 -71163 -36.1 39233 40650 -3.5 46698 48115 -2.9 9157 4181.6 119.0 4067.0 6039 -32.7 13374 10371 29.0 13224 10221 29.4
139.7 143.6 -2.71 -47717 -78505 -39.2 40127 41999 -4.5 47667 49539 -3.8 10282 4187.1 145.5 4228.9 6736 -37.2 14660 11073 32.4 14510 10923 32.8
140.6 145.3 -3.19 -50324 -86839 -42.0 41450 43677 -5.1 49066 51293 -4.3 11455 4131.3 177.3 4129.7 7352 -43.8 15734 11633 35.3 15584 11483 35.7
140.0 145.7 -3.87 -53117 -95995 -44.7 42803 45433 -5.8 50494 53125 -5.0 13528 4320.9 213.1 4496.1 8761 -48.7 18174 13231 37.4 18024 13081 37.8
71
Real Fixed Public Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Gross Domestic Product deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Gross National Product in 1992 prices deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Aggregate Demand in Constant Prices 1992 Import Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Total Employment (in thousands) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Total Population Employed Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Government to Non-Government Aggregate Demand Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Housing Stock Consistent With Decennial Census Data Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
4100 2151.0 90.6 43790 42619 2.7 45478 44609 1.9 119955 118471 1.25 1370.5 1359.8 0.79 0.30 0.30 0.03 0.09 0.079 19.3 1819853 1762143
4629 2205.4 109.9 45483 43815 3.8 47468 46252 2.6 125039 122999 1.66 1388.4 1375.5 0.93 0.30 0.30 -0.07 0.10 0.077 23.6 1854938 1781667
5165 2210.2 133.7 46867 44826 4.6 49146 47610 3.2 127641 125509 1.70 1411.4 1394.0 1.25 0.30 0.30 -0.04 0.10 0.076 28.8 1891475 1800703
5767 2217.4 160.1 48419 45937 5.4 50919 49092 3.7 130729 128367 1.84 1431.7 1410.6 1.49 0.30 0.30 -0.09 0.10 0.075 34.4 1926829 1818531
6426 2210.4 190.7 49936 46944 6.4 53790 51319 4.8 138296 135274 2.23 1450.7 1425.7 1.76 0.30 0.30 -0.15 0.10 0.072 40.4 1965722 1836713
72
% Deviation
3.3 2018
4.1 2019 91190 90953 0.26 14991 16587 -9.6 75130 74235 1.21 4876.7 4751.5 2.63 26584 25915 2.58 41869 49134 -14.8 3917.6 6665 -41.2
5.0 2020 94325 94473 -0.16 15199 17031 -10.8 77387 76289 1.44 4930.8 4785.6 3.03 27701 26891 3.01 42792 51231 -16.5 3932.4 7073 -44.4
6.0 2021 96881 97297 -0.43 15304 17422 -12.2 79170 77962 1.55 4984.3 4818.6 3.44 28869 27901 3.47 43261 53105 -18.5 3949.3 7570 -47.8
7.0 2022 99881 100614 -0.73 15661 18085 -13.4 81184 79829 1.70 5038.8 4851.2 3.87 30078 28941 3.93 44868 56335 -20.4 4005.3 8154 -50.9
Real Imports deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Non-durables Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Exports deflated by Imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Population Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Disposable Personal Income Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Durables Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
88409 88085 0.37 14617 15973 -8.5 73122 72342 1.08 4823.9 4717.2 2.26 25513 24969 2.18 40230 46290 -13.1 3781.8 6089 -37.9
73
Real Fixed Private Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Private Investment Machinery Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Millions of GDP in 1992 prices per 1000 non-government employee Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Perceived Value of Families Wealth Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Families Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Implicit Deflator Construction (1992=100) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Private Housing Units Unadjusted for Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Agriculture Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
8296 2302.1 260.4 4422.2 9662 -54.2 79.5 93.5 -14.9 219486 260714 -15.8 1321060 1308270 0.98 165.1 316.1 -47.8 27924 5997 365.6 414.5 775.4
9067 2169.7 317.9 4249.8 10431 -59.3 80.9 97.0 -16.6 227846 270366 -15.7 1328472 1313268 1.16 167.1 336.1 -50.3 29551 5586 429.0 412.6 809.4
10366 2199.6 371.3 4576.2 12464 -63.3 81.4 100.2 -18.7 235534 279312 -15.7 1335936 1318175 1.35 169.9 359.1 -52.7 28345 4704 502.5 413.0 849.8
11772 2177.2 440.7 4608.9 13941 -66.9 84.1 105.8 -20.5 244938 290429 -15.7 1343538 1323024 1.55 173.4 384.9 -54.9 31407 4579 585.8 415.3 894.6
13276 2112.4 528.5 4611.8 15726 -70.7 85.9 110.6 -22.3 256261 302713 -15.3 1351025 1327725 1.75 177.6 414.1 -57.1 31901 4082 681.4 413.8 934.5
74
% Deviation Gross Domestic Product Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Manufacturing Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Construction and Mining Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Agriculture Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Manufacturing Accelerated Public Investment & Moderate Inflation
-46.5 60137 111821 -46.2 14681 27619 -46.8 64090 120027 -46.6 6776 3806.6 78.0 18.6 19.9 -6.3 65.2 54.2 20.2 915.5 888.2 3.07 140.0
-49.0 63713 123842 -48.6 14803 29215 -49.3 67460 132471 -49.1 7707 3962.5 94.5 18.2 19.6 -7.3 64.7 53.2 21.7 936.7 903.7 3.65 140.2
-51.4 67408 136967 -50.8 14926 30902 -51.7 70976 146026 -51.4 7649 3685.5 107.6 17.8 19.4 -8.2 64.5 52.2 23.7 960.0 921.0 4.24 140.0
-53.6 71320 151529 -52.9 15051 32687 -54.0 74263 160249 -53.7 10141 4510.0 124.9 17.5 19.2 -9.1 63.7 50.7 25.5 985.6 939.6 4.90 139.9
-55.7 75613 167842 -54.9 15176 34575 -56.1 78096 176685 -55.8 11541 4686.3 146.3 17.1 19.0 -10.1 62.7 49.3 27.2 1009.5 956.1 5.58 136.8
75
Stagnant Public Investment & High Inflation % Deviation Net Factor Payments to Foreign Residents Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal Consumption Expenditures deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal plus Government Consumption Expenditures Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Plant and Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Investment, total Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment
146.5 -4.46 -55727 -105691 -47.3 43912 47030 -6.6 51680 54799 -5.7 15260 4303.9 254.6 4588.4 9828 -53.3 19998 14282 40.0 19848 14132 40.4
147.6 -5.05 -58737 -116806 -49.7 45492 49166 -7.5 53338 57013 -6.4 16866 4171.5 304.3 4448.5 10630 -58.2 21465 14951 43.6 21315 14801 44.0
148.5 -5.75 -61877 -128913 -52.0 46832 50995 -8.2 54757 58920 -7.1 19100 4201.4 354.6 4763.9 12652 -62.3 24014 17003 41.2 23864 16853 41.6
149.4 -6.40 -64814 -141618 -54.2 48122 52893 -9.0 56126 60897 -7.8 21555 4179.0 415.8 4757.4 14090 -66.2 26462 18419 43.7 26312 18269 44.0
147.1 -7.05 -68237 -156299 -56.3 49745 55181 -9.9 57829 63265 -8.6 24233 4114.2 489.0 4760.9 15876 -70.0 29144 20140 44.7 28994 19990 45.0
76
Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Gross Domestic Product deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Gross National Product in 1992 prices deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Aggregate Demand in Constant Prices 1992 Import Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Total Employment (in thousands) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Total Population Employed Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Government to Non-Government Aggregate Demand Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Housing Stock Consistent With Decennial Census Data Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
7130 2168.0 228.9 51548 48012 7.4 56391 53338 5.7 144800 141423 2.39 1472.3 1441.9 2.11 0.31 0.31 -0.15 0.10 0.069 47.3 2005021 1854087 8.1
7998 2200.5 263.4 53326 49160 8.5 58743 55246 6.3 149933 146199 2.55 1492.8 1457.2 2.45 0.31 0.31 -0.18 0.10 0.067 54.9 2045809 1870912 9.3
8923 2189.5 307.5 54548 50187 8.7 61833 57739 7.1 156158 152212 2.59 1515.4 1474.1 2.80 0.31 0.31 -0.23 0.11 0.065 63.6 2085301 1886764 10.5
9932 2150.2 361.9 57177 51541 10.9 64877 59980 8.2 161758 157278 2.85 1539.6 1492.0 3.19 0.31 0.31 -0.24 0.11 0.064 72.8 2127923 1902561 11.8
11106 2151.0 416.3 59337 52834 12.3 68276 62619 9.0 168157 163233 3.02 1559.0 1504.6 3.62 0.31 0.31 -0.24 0.11 0.062 83.3 2170935 1917757 13.2
77
2023 Real Imports deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Non-durables Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Exports deflated by Imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Population Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Disposable Personal Income Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Consumption Expenditures Durables Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Private Investment 103813 105043 -1.17 15917 18646 -14.6 83707 82139 1.91 5095.0 4884.2 4.31 31341 30014 4.42 46032 59125 -22.1 4078.9 8828 -53.8
2024 107997 109725 -1.58 16166 19248 -16.0 86910 85161 2.05 5151.4 4916.7 4.77 32665 31129 4.93 47175 62174 -24.1 4137.9 9565 -56.7
2025 111519 113873 -2.07 16542 20005 -17.3 89221 87282 2.22 5206.7 4948.1 5.23 34042 32280 5.46 48926 66084 -26.0 4287.2 10566 -59.4
78
Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Private Investment Machinery Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Millions of GDP in 1992 prices per 1000 non-government employee Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Perceived Value of Families Wealth Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Families Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Implicit Deflator Construction (1992=100) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Private Housing Units Unadjusted for Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Agriculture Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
16088 2239.1 618.5 4965.6 18974 -73.8 87.7 115.9 -24.3 266091 313305 -15.1 1358608 1332326 1.97 182.0 445.7 -59.2 32363 3627 792.3 413.6 979.5 -57.8
18202 2270.2 701.8 4998.4 21434 -76.7 90.6 122.7 -26.2 276798 324780 -14.8 1366374 1336991 2.20 185.7 477.8 -61.1 31615 3104 918.6 413.7 1026.1 -59.7
20114 2198.7 814.8 5015.8 24351 -79.4 92.1 127.9 -28.0 287296 335812 -14.4 1374138 1341566 2.43 189.2 511.2 -63.0 36228 3116 1062.5 412.4 1071.7 -61.5
79
Gross Domestic Product Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Manufacturing Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Product Construction and Mining Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Agriculture Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Services Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Manufacturing Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
80083 185737 -56.9 15303 36572 -58.2 81996 194407 -57.8 13208 4965.3 166.0 16.7 18.8 -11.1 61.8 47.9 29.1 1034.9 973.9 6.27 135.5 146.9
84855 205713 -58.8 15430 38685 -60.1 85838 213406 -59.8 15145 5379.2 181.5 16.3 18.6 -12.2 60.5 45.9 31.7 1061.4 992.3 6.97 137.4 150.1
89741 227360 -60.5 15559 40919 -62.0 90161 234994 -61.6 17470 5753.8 203.6 16.0 18.4 -13.1 61.0 45.6 33.8 1085.2 1007.7 7.68 138.5 152.4
80
% Deviation Net Factor Payments to Foreign Residents Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal Consumption Expenditures deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Personal plus Government Consumption Expenditures Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Construction Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Plant and Equipment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Gross Domestic Investment, total Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Domestic Investment Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Accelerated Public Investment & Moderate Inflation
-7.77 -71720 -172129 -58.3 51337 57489 -10.7 59502 65653 -9.4 28360 4240.9 568.7 5169.1 19177 -73.0 33679 23568 42.9 33529 23418 43.2 12476
-8.46 -75153 -189099 -60.3 52968 59943 -11.6 61215 68189 -10.2 31946 4272.0 647.8 5206.8 21642 -75.9 37303 26064 43.1 37153 25914 43.4 13953
-9.15 -79014 -208382 -62.1 54872 62851 -12.7 63200 71180 -11.2 35508 4200.6 745.3 5231.3 24566 -78.7 40889 28917 41.4 40739 28767 41.6 15609
81
Stagnant Public Investment & High Inflation % Deviation Real Gross Domestic Product deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Gross National Product in 1992 prices deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Aggregate Demand in Constant Prices 1992 Import Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Total Employment (in thousands) Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Total Population Employed Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Proportion of Government to Non-Government Aggregate Demand Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Housing Stock Consistent With Decenial Census Data Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
2205.4 465.7 61624 54157 13.8 73076 66317 10.2 176889 171360 3.23 1581.9 1520.4 4.04 0.31 0.31 -0.26 0.12 0.059 94.7 2214476 1932565 14.6
2210.2 531.3 64087 55580 15.3 77431 69690 11.1 185428 179415 3.35 1608.7 1539.9 4.47 0.31 0.31 -0.29 0.12 0.057 107.6 2257269 1946849 15.9
2217.4 604.0 66703 56967 17.1 81791 73505 11.3 193310 187379 3.17 1633.6 1557.2 4.91 0.31 0.31 -0.30 0.12 0.055 122.6 2304674 1961146 17.5
82
Table 3 Exogenous and Policy Variables 2008 - 2010

2008 Government Consumption Expenditures in 1992 Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Dummy Accounting for the Demise of 936 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Election Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Hurricane Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Prime Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Construction Government Accelerated Public Investment & Moderate Inflation 7032.7 7032.7 0.00 0.00 0.00 -1 1 0.00 0 0 -333 333 0.00 5.92 5.92 0.00 2242 2009 7103.0 7103.0 0.00 0.00 0.00 -0 0 -0 0 -333 333 0.00 7.00 7.00 0.00 2511 2010 7174.0 7174.0 0.00 0.00 0.00 -0 0 -0 0 -333 333 0.00 6.00 6.00 0.00 2812 2011 7245.8 7245.8 0.00 0.00 0.00 -0 0 -0 0 -333 333 0.00 6.50 6.50 0.00 3150 2012 7318.2 7318.2 0.00 0.00 0.00 -1 1 0.00 0 0 -333 333 0.00 7.00 7.00 0.00 3528
83
Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Machinery and Equipment Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Price Index to Deflate Sector GDP 1992=100 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Changes in Inventories Deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Manufacturing Capacity Utilization Index US Year Averages Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Conventional 30 Years Mortgage Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Housing Units Built Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Public Housing Units Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Persons per Family
2001.8 12.0 208.6 208.6 0.00 143.8 167.7 -14.2 150 150 0.00 79.3 79.3 0.00 6.38 6.38 0.00 11000 11000 0.00 1200 1200 0.00
2001.8 25.4 166.1 166.1 0.00 146.7 179.4 -18.2 150 150 0.00 80.0 80.0 0.00 6.75 6.75 0.00 11000 11000 0.00 1370 1370 0.00
2001.8 40.5 198.7 198.7 0.00 149.6 192.0 -22.1 150 150 0.00 80.8 80.8 0.00 7.00 7.00 0.00 11000 11000 0.00 724 724 0.00
2001.8 57.4 187.7 187.7 0.00 152.6 205.4 -25.7 150 150 0.00 80.3 80.3 0.00 8.06 8.06 0.00 11000 11000 0.00 770 770 0.00
2001.8 76.2 148.4 148.4 0.00 155.7 219.8 -29.2 150 150 0.00 75.0 75.0 0.00 6.97 6.97 0.00 11000 11000 0.00 794 794 0.00
84
Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Venezuelan Tia Juana Light Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Rate of Growth of US GDP Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Year 1955=1 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation An Index of Underground Economic Activity Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Transfer Payments deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
3.20 3.20 0.00 92.4 92.4 0.00 2.70 2.70 0.00 54 54 0.00 6.2 6.2 0.00 6820 6820 0.00 2013
3.20 3.20 0.00 100.0 100.0 0.00 2.90 2.90 0.00 55 55 0.00 6.4 6.4 0.00 7025 7025 0.00 2014 7465.3 7465.3 0.00 0.00
3.20 3.20 0.00 92.0 92.0 0.00 2.50 2.50 0.00 56 56 0.00 6.7 6.7 0.00 7236 7236 0.00 2015 7540.0 7540.0 0.00 0.00
3.20 3.20 0.00 90.0 90.0 0.00 3.70 3.70 0.00 57 57 0.00 6.9 6.9 0.00 7453 7453 0.00 2016 7615.4 7615.4 0.00 0.00
3.20 3.20 0.00 90.0 90.0 0.00 4.50 4.50 0.00 58 58 0.00 7.2 7.2 0.00 7676 7676 0.00 2017 7691.5 7691.5 0.00 0.00
Government Consumption Expenditures in 1992 Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Dummy Accounting for the Demise of 936 Accelerated Public Investment & Moderate Inflation
7391.4 7391.4 0.00 0.00
85
Stagnant Public Investment & High Inflation % Deviation Election Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Hurricane Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Prime Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Construction Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Machinery and Equipment Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Price Index to Deflate Sector GDP 1992=100 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Changes in Inventories Deflated by imporindex_92
0.00 -0 0 -1 1 0.00 333 333 0.00 7.00 7.00 0.00 3951 2001.8 97.4 149.1 149.1 0.00 158.8 235.2 -32.5
0.00 -0 0 -0 0 -333 333 0.00 7.00 7.00 0.00 4425 2001.8 121.1 203.6 203.6 0.00 162.0 251.6 -35.6
0.00 -0 0 -0 0 -333 333 0.00 7.00 7.00 0.00 4956 2001.8 147.6 208.4 208.4 0.00 165.2 269.2 -38.6
0.00 -1 1 0.00 0 0 -333 333 0.00 6.00 6.00 0.00 5551 2001.8 177.3 215.5 215.5 0.00 168.5 288.1 -41.5
0.00 -0 0 -0 0 -333 333 0.00 6.50 6.50 0.00 6217 2001.8 210.6 208.6 208.6 0.00 171.9 308.3 -44.2
86
Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Manufacturing Capacity Utilization Index US Year Averages Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Conventional 30 Years Mortgage Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Housing Units Built Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Public Housing Units Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Persons per Family Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Venezuelan Tia Juana Light Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Rate of Growth of US GDP Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
150 150 0.00 73.0 73.0 0.00 6.54 6.54 0.00 11000 11000 0.00 314 314 0.00 3.20 3.20 0.00 90.0 90.0 0.00 4.20 4.20 0.00
150 150 0.00 76.2 76.2 0.00 5.82 5.82 0.00 11000 11000 0.00 51 51 0.00 3.20 3.20 0.00 90.0 90.0 0.00 2.25 2.25 0.00
150 150 0.00 78.4 78.4 0.00 5.89 5.89 0.00 11000 11000 0.00 91 91 0.00 3.20 3.20 0.00 95.0 95.0 0.00 0.23 0.23 0.00
150 150 0.00 80.3 80.3 0.00 5.87 5.87 0.00 11000 11000 0.00 152 152 0.00 3.20 3.20 0.00 100.0 100.0 0.00 1.90 1.90 0.00
150 150 0.00 79.9 79.9 0.00 6.41 6.41 0.00 11000 11000 0.00 531 531 0.00 3.20 3.20 0.00 100.0 100.0 0.00 3.70 3.70 0.00
87
Year 1955=1 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation An Index of Underground Economic Activity Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Transfer Payments deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
59 59 0.00 7.5 7.5 0.00 7907 7907 0.00 2018
60 60 0.00 7.8 7.8 0.00 8144 8144 0.00 2019 7846.1 7846.1 0.00 0.00 0.00 -0 0 -0 0 --
61 61 0.00 8.1 8.1 0.00 8388 8388 0.00 2020 7924.6 7924.6 0.00 0.00 0.00 -1 1 0.00 1 1 0.00
62 62 0.00 8.4 8.4 0.00 8640 8640 0.00 2021 8003.8 8003.8 0.00 0.00 0.00 -0 0 -0 0 --
63 63 0.00 8.7 8.7 0.00 8899 8899 0.00 2022 8083.9 8083.9 0.00 0.00 0.00 -0 0 -0 0 --
Government Consumption Expenditures in 1992 Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Dummy Accounting for the Demise of 936 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Election Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Hurricane Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Government
7768.4 7768.4 0.00 0.00 0.00 -0 0 -0 0 --
88
Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Prime Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Construction Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Machinery and Equipment Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Price Index to Deflate Sector GDP 1992=100 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Changes in Inventories Deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Manufacturing Capacity Utilization Index US Year Averages Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Conventional 30 Years Mortgage Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
333 333 0.00 7.00 7.00 0.00 6963 2001.8 247.9 166.1 166.1 0.00 175.3 329.8 -46.8 150 150 0.00 79.3 79.3 0.00 6.34 6.34 0.00
333 333 0.00 7.00 7.00 0.00 7799 2001.8 289.6 198.7 198.7 0.00 178.8 352.9 -49.3 150 150 0.00 80.0 80.0 0.00 6.34 6.34 0.00
333 333 0.00 7.00 7.00 0.00 8735 2001.8 336.3 187.7 187.7 0.00 182.4 377.6 -51.7 150 150 0.00 80.8 80.8 0.00 6.94 6.94 0.00
333 333 0.00 7.00 7.00 0.00 9783 2001.8 388.7 148.4 148.4 0.00 186.0 404.1 -54.0 150 150 0.00 80.3 80.3 0.00 7.43 7.43 0.00
333 333 0.00 6.00 6.00 0.00 10957 2001.8 447.4 149.1 149.1 0.00 189.8 432.3 -56.1 150 150 0.00 75.0 75.0 0.00 8.06 8.06 0.00
89
Housing Units Built Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Public Housing Units Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Persons per Family Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Venezuelan Tia Juana Light Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Rate of Growth of US GDP Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Year 1955=1 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation An Index of Underground Economic Activity Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Transfer Payments deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
11000 11000 0.00 395 395 0.00 3.20 3.20 0.00 100.0 100.0 0.00 3.20 3.20 0.00 64 64 0.00 9.1 9.1 0.00 9166 9166
11000 11000 0.00 257 257 0.00 3.20 3.20 0.00 120.0 120.0 0.00 2.90 2.90 0.00 65 65 0.00 9.4 9.4 0.00 9441 9441
11000 11000 0.00 167 167 0.00 3.20 3.20 0.00 130.0 130.0 0.00 2.60 2.60 0.00 66 66 0.00 9.8 9.8 0.00 9724 9724
11000 11000 0.00 236 236 0.00 3.20 3.20 0.00 130.0 130.0 0.00 2.00 2.00 0.00 67 67 0.00 10.2 10.2 0.00 10016 10016
11000 11000 0.00 133 133 0.00 3.20 3.20 0.00 120.0 120.0 0.00 2.00 2.00 0.00 68 68 0.00 10.6 10.6 0.00 10317 10317
90
% Deviation
0.00 2023
0.00 2024 8246.4 8246.4 0.00 0.00 0.00 -1 1 0.00 0 0 -333 333 0.00 7.00 7.00 0.00 13745 2001.8 586.6
0.00 2025 8328.8 8328.8 0.00 0.00 0.00 -0 0 -0 0 -333 333 0.00 7.00 7.00 0.00 15394 2001.8 669.0
0.00
0.00
Government Consumption Expenditures in 1992 Prices Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Dummy Accounting for the Demise of 936 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Election Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Hurricane Year Dummy Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Employment in Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Prime Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Fixed Public Investment Construction Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
8164.7 8164.7 0.00 0.00 0.00 -0 0 -0 0 -333 333 0.00 6.50 6.50 0.00 12272 2001.8 513.0
91
Real Fixed Public Investment Machinery and Equipment Government Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Price Index to Deflate Sector GDP 1992=100 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Changes in Inventories Deflated by imporindex_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Manufacturing Capacity Utilization Index US Year Averages Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Conventional 30 Years Mortgage Rate Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Housing Units Built Unaccounted Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of New Public Housing Units Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Number of Persons per Family Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation
203.6 203.6 0.00 193.6 462.6 -58.2 150 150 0.00 73.0 73.0 0.00 6.97 6.97 0.00 11000 11000 0.00 200 200 0.00 3.20 3.20
208.4 208.4 0.00 197.4 495.0 -60.1 150 150 0.00 76.2 76.2 0.00 6.54 6.54 0.00 11000 11000 0.00 200 200 0.00 3.20 3.20
215.5 215.5 0.00 201.4 529.6 -62.0 150 150 0.00 78.4 78.4 0.00 5.82 5.82 0.00 11000 11000 0.00 200 200 0.00 3.20 3.20
92
% Deviation Venezuelan Tia Juana Light Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Rate of Growth of US GDP Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Year 1955=1 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation An Index of Underground Economic Activity Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation Real Transfer Payments deflated by imporindx_92 Accelerated Public Investment & Moderate Inflation Stagnant Public Investment & High Inflation % Deviation
0.00 110.0 110.0 0.00 2.90 2.90 0.00 69 69 0.00 11.0 11.0 0.00 10626 10626 0.00
0.00 110.0 110.0 0.00 2.50 2.50 0.00 70 70 0.00 11.4 11.4 0.00 10945 10945 0.00
0.00 115.0 115.0 0.00 3.70 3.70 0.00 71 71 0.00 11.9 11.9 0.00 11273 11273 0.00
93
APENDIX III ESTIMATES OF HOUSING UNITS BUILT WITHOUT PERMITS
94
Table 4 Housing Units Built 1955 - 2004

Fiscal Year 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Housing Units Built With and Without Permits 1990 - 2004 Recorded Recorded Unaccounted Stock Net Private New Public (Average W According to Change /o Permit) Census 4,515 6,667 6,284 5,539 7,122 9,932 9,081 13,185 11,366 12,693 16,294 17,596 14,851 17,400 17,495 16,609 16,820 20,328 20,562 18,779 10,575 9,545 9,556 14,007 13,748 11,800 9,867 7,738 7,076 5,672 7,552 8,204 9,967 10,739 11,711 10,345 10,492 8,945 9,785 11,268 13,685 13,959 808 720 3,442 2,553 1,784 4,341 6,620 6,740 3,626 3,554 5,800 4,758 3,778 3,158 2,430 5,890 4,151 5,489 4,393 10,215 8,057 5,373 4,433 1,804 1,847 2,508 3,031 2,962 1,524 832 491 397 1,549 483 3 133 236 167 257 395 531 152 167 167 167 167 167 167 167 167 167 167 9,920 9,920 9,920 9,920 9,920 9,920 9,920 9,920 9,920 9,920 10,889 10,889 10,889 10,889 10,889 10,889 10,889 10,889 10,889 10,330 10,330 10,330 10,330 10,330 10,330 10,330 474,300 481,564 491,128 499,085 507,842 521,959 537,563 557,320 572,226 588,366 610,256 632,402 650,885 671,264 691,022 713,713 744,089 779,231 813,524 851,790 879,866 904,290 927,800 953,103 978,192 993,678 1,017,069 1,038,298 1,057,462 1,074,565 1,093,182 1,112,347 1,134,378 1,156,121 1,178,347 1,188,985 1,209,632 1,228,758 1,248,710 1,270,120 1,293,907 1,317,963 6,838 7,264 9,564 7,957 8,758 14,117 15,604 19,757 14,906 16,140 21,890 22,146 18,483 20,380 19,757 22,691 30,376 35,141 34,294 38,265 28,076 24,424 23,511 25,302 25,090 15,486 23,391 21,229 19,164 17,103 18,616 19,165 22,032 21,742 22,226 10,638 20,647 19,126 19,952 21,410 23,787 24,056 Total Built
5,323 7,387 9,726 8,092 8,906 14,273 15,868 20,092 15,159 16,414 22,261 22,521 18,796 20,725 20,092 22,666 30,891 35,737 34,875 38,914 28,552 24,838 23,909 25,731 25,515 24,228 23,787 21,589 19,489 17,393 18,932 19,490 22,405 22,111 22,603 20,808 21,058 19,442 20,372 21,993 24,546 24,441
95
Fiscal Year 1997 1998 1999 2001 2002 2003 2004
Housing Units Built With and Without Permits 1990 - 2004 Recorded Recorded Unaccounted Stock Net Private New Public (Average W According to Change /o Permit) Census 15,464 14,973 14,056 20,070 18,000 17,546 18,692 91 51 314 770 724 1,370 1,200 10,330 10,330 10,330 10,330 10,330 10,330 10,330 1,343,500 1,368,553 1,392,705 1,449,575 1,477,605 1,505,189 1,533,899 25,536 25,053 24,152 30,066 28,030 27,584 28,710
Total Built
25,885 25,354 24,700 31,170 29,054 29,246 30,222
10.1 10.2
96

Socio-Economic Environment of The Commonwealth of Puerto Rico: A Long-Term View

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Socio-Economic Environment of The Commonwealth of Puerto Rico: A Long-Term View

Загружено:

Авторское право:

Доступные форматы

A Long-term View

Of the Socio-Economic Environment of The Commonwealth of Puerto Rico:

Elas R. Gutirrez, Ph.D.

5.2 5.3 5.4 6 7 8

1.1 The playing field as seen in August 2005

1.2 Prevailing Trends

Figure 2 Population Age Composition 1971 2005 and Forecasts 20025

Population 14 and less Populaton 15 through 64 Populaltion 65 and older

1.3 The current predicament

End of Fiscal Year Dc/P D/P KFc/P

3 Building Scenarios: a management planning tool

4 The Macroeconomic Model

4.1 The model structure

Chart 1: Xplorahs Economic Subsystem Interface

Table 1: Model Variables: Mnemonics and Descriptions

4.2 Productivity: the critical factor

Figure 4: Economic Cycles

5.1.1 The Assumptions

Figure 6: Time Paths for Key Exogenous and Policy Variables

Venezuelan Tia Juana Light

5.1.2 The Likely Long-term Response

Figure 7: Real Aggregate Demand

Figure 9: Employment in Manufacturing

Figure 10: Employment in Services

Figure 11: Employment in Construction

Figure 12: Employment in Agriculture

Figure 13: New Housing Units Built by Private Sector

Figure 14: Housing Stock

Figure 15 Active Population

Figure 18: Proportion of Government to Private Aggregate Demand

Figure 18: GDP for Five Sectors

5.2 A Short-term View for the US Economy as seen in 2006

5.3 A Medium-term View for Puerto Ricos Economy

5.4 Alternative Long-term Views for Puerto Ricos Economy

6 Some Market-specific Implications

Figure 19 Financial Assets, Average Value of New Houses, Perceived Wealth

7 Spatial and Land Use Implications

APENDIX I FINAL DEMAND MODEL STRUCTURE

9 Structural Specification System: Xplorah_22

9.1 Stochastic Equations

APENDIX II ECONOMETRIC ESTIMATION RESULTS

Determinant residual covariance

R-squared Adjusted R-squared S.E. of regression Durbin-Watson stat

0.886474 0.875831 0.089475 0.754968

Mean dependent var S.D. dependent var Sum squared resid

7.948479 0.253920 0.256187

Adjusted R-squared S.E. of regression Durbin-Watson stat

0.825665 0.114159 1.694265

S.D. dependent var Sum squared resid

Real Fixed Domestic Investment 2 S.E.

Employment in Agriculture (Accelerated Public Investment & Moderate Inflation Mean)

Employment in Services (Accelerated Public Investment & Moderate Inflation Mean)

Employment in Construction (Accelerated Public Investment & Moderate Inflation Mean)

Employment in Manufacturing (Accelerated Public Investment & Moderate Inflation Mean)

Table 2 Endogenous Variables 2008 2025 Under Two Scenarios

Stagnant Public Investment & High Inflation % Deviation

1649570 0.3 2013

Table 3 Exogenous and Policy Variables 2008 - 2010

7391.4 7391.4 0.00 0.00

59 59 0.00 7.5 7.5 0.00 7907 7907 0.00 2018

7768.4 7768.4 0.00 0.00 0.00 -0 0 -0 0 --

APENDIX III ESTIMATES OF HOUSING UNITS BUILT WITHOUT PERMITS

Table 4 Housing Units Built 1955 - 2004