The economic costs to the U.S. of closing its borders: A computable general equilibrium analysis

We use a CGE model to simulate the effects of a one-year US border closure. Relative to previously used input-output modeling, CGE modeling offers a flexible framework for capturing bottleneck and labor-market effects. Our analysis suggests that the costs of a prolonged closure could be much greater than indicated by input-output studies. We find that cutting all imports by 95 in an environment of sticky real wages would reduce GDP by 48 . However, if bottleneck imports (mainly oil) were exempt and workers accepted real wage cuts then the GDP reduction would be only 11 .