2. The Second-Stage Simulation: Composition Changes in Household Expenditure In the second year after the implementation of the tax rebate policy, the household expenditure on automobile maintenance and fuels are expected to increase, and the expenditure on public transportation are expected to decrease. In the second stage, three scenarios are simulated to represent the changes of the macroeconomic indicators and household income due to different composition changes in household expenditure. The three scenarios are as follows: 1. Composition changes in the household expenditure resulting in a declining GDP 2. Composition changes in the household expenditure resulting in a stabilized GDP 3. Composition changes in the household expenditure resulting in an increasing GDP
-0.1%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
Change
Real GDP CPI Import Export Total Employment Govt Income
Expansion rate of automobile sales
7
2.1 Composition changes in the household expenditure resulting in a declining GDP In the first scenario of the second stage, four cases of changes in the household expenditure are simulated. The composition change in consumption of fuels, automobile and maintenance, and public transportation in this scenario results in a declining GDP. Case 1 represents the lowest level of change in household expenditure composition while Case 4 represents the highest. Table 1 shows the detail of composition changes of these four cases.