The Welfare Effects of Debt: Crowding Out and Risk Shifting

The code and data in this repository allow users to replicate analysis results and create the figures found in CBO's working paper The Welfare Effects of Debt: Crowding Out and Risk Shifting by Michael Falkenheim, Senior Adviser in CBO's Financial Analysis Division.

How to Install the Welfare Effects of Debt Analysis

Follow these three steps to install the code and data associated with the Welfare Effects of Debt analysis on your computer:

1. Install the Anaconda distribution of Python
   Download and install the Anaconda distribution of Python from Anaconda's Installation page.
   
   The Welfare Effects of Debt analysis was conducted using Python 3.8 on computers running Windows 10, although the analysis should run on other operating systems as well.
   
   The external packages used in the analysis were managed using Anaconda's built-in package manager, conda. To replicate the results in this repository, you will need to use conda to create a virtual environment that loads the same versions of Python and external packages used when the analysis was conducted. All the external packages (and their versions) are documented in the environment.yml file in the project’s root directory. That file is used to create a virtual environment that matches the one used when the analysis was conducted. This is done in step 3, below.

2. Download the repository ("repo") from GitHub
   There are several options for how to get the code and data from GitHub to your computer:

   • If you have git installed on your computer, you can clone a copy of the repo to your computer. This is done through git with the command:
     git clone https://github.com/us-cbo/debtwelfare.git

   • If you also have a GitHub account, you should first fork a copy of the repo to your own GitHub account and then clone it to your computer with the command:
     git clone https://github.com/<your-GitHub-account-name>/debtwelfare.git.

   • If you don’t have git installed on your computer, you can download a zip file containing the entire repo and then unzip that file in a directory on your computer.

3. Create the virtual environment
   Once you have installed the Anaconda distribution of Python and you have downloaded a copy of the repo to your computer, follow these steps to create a virtual environment that will make sure you have all the appropriate dependencies to run the analysis:

   • Open the Anaconda Prompt application, which comes as part of the Anaconda installation

   • Navigate to the root directory where you cloned or downloaded the repository on your computer using the change directory (cd) command:
     cd path/to/your/copy/of/CBO-debtwelfare
     (The last subdirectory name, CBO-debtwelfare, is just a suggested name; you may name the subdirectory anything you wish.)

   • Create a virtual environment that matches the one used to conduct the Welfare Effects of Debt analysis with the command:
     conda env create -f environment.yml
     (That command will create a virtual environment on your computer named CBO-debtwelfare and may take several minutes to complete.)

   • Activate the newly created virtual environment with the command:
     conda activate CBO-debtwelfare
     (To replicate the results in the /data/outputs/ directory, the code needs to be run from within that virtual environment.)

   • When finished working with the Welfare Effects of Debt repository, deactivate the virtual environment from the Anaconda Prompts by typing:
     conda deactivate

How to Run the Welfare Effects of Debt Analysis

Once the above steps have been followed, and with the CBO-welfare-effects-debt virtual environment activated you can run the model with the following commands typed into the Anaconda Prompt from the root of the project directory:
python src/main.py

That command will run the analysis using a default Cobb-Douglas production function specification.

To run the analysis using a linear production function specification, use the command:
python src/main_linear.py

For each of those runs, a single output file will be written to the /data/output/ directory under the project (welfare_effect_summary.csv and welfare_effect_summary_linear.csv, respectively).

Finally, to create the figures in the working paper, use the command:
python src/plot_figures.py

The figures are written out to the /figures/ directory under the root directory for the project.

When you are finished working with the repository, deactivate the virtual environment by typing: conda deactivate at the Anaconda Prompt.

Contact

Questions about the code and data in this repository may be directed to CBO's Office of Communications at communications@cbo.gov.

CBO will respond to such requests as its workload permits.