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Macro, industry and regional effects of eliminating Buy America(n) programs: USAGE simulations

Peter Dixon, Maureen Rimmer and Robert Waschik ()

Centre of Policy Studies/IMPACT Centre Working Papers from Victoria University, Centre of Policy Studies/IMPACT Centre

Abstract: The U.S. government attempts to stimulate employment, especially in the manufacturing sector, by favoring U.S. contractors for public sector projects (Buy American regulations) and by insisting that these contractors themselves favor domestic suppliers of inputs such as steel (Buy America regulations). We refer to these policies collectively as Buy America(n). Using a detailed computable general equilibrium model, we demonstrate that Buy America(n) policies are counter-productive. The main reason is that they increase costs to the U.S. government. Scrapping these policies would reduce employment in manufacturing but boost employment in the rest of the economy with a net gain of about 306 thousand jobs. Even in the manufacturing sector, there would be many winning industries including those producing machinery and other high-tech products. Employment would increase in 50 out of 51 states and 430 out of 436 congressional districts.

Keywords: Buy America(n); local-content schemes; computable general equilibrium; regional modeling; U S manufacturing (search for similar items in EconPapers)
JEL-codes: C68 F13 F16 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-cmp
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Published in Dixon, P.B., M.T. Rimmer and R.G. Waschik (2017), "Evaluating the effects of local content measures in a CGE model: Eliminating the US Buy America(n) programs", Economic Modelling xx, pp.xx-xx.

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