Figures 1-3 in the above-mentioned paper show how factor price adjust gradually to changes in fiscal policy. The time-paths of adjustment depend on the adjustment cost parameters of the model.
Animations provide a convenient means by which to illustrate the sensitivity of these factor-price adjustment paths to changes in the adjustment cost parameters. One can see how the entire shape of the path varies as adjustment costs go from low to high (and adjustment speeds go from fast to slow). With two policy parameters and two adjustment cost parameters, there are four cases to consider.
Clicking on the links below should initiate the animations, which (of course) cannot be displayed in the published version of the paper. One note on interpretation: the actual numerical values of the adjustment cost parameter, displayed at the top of each figure, is not so important here; what matters more is the time horizon over which most of the dynamic adjustment occurs, as seen in the figures by the times, in years, at which the time paths get fairly close to their asymptotes.
(a) Labor.
(b) Capital.
(a) Labor.
(b) Capital.