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Evaluating transfer programmes within a general equilibrium framework

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  • David P. Coady
  • Rebecca L. Harris
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    Abstract

    We develop a general equilibrium model for evaluating domestically financed transfer programmes and derive analytical expressions which provide a framework for combining results from a computable general equilibrium model with disaggregated household data. We separate the welfare impact into three components, i.e. "redistribution", "reallocative", and "distortionary" effects. We show how these are subsumed within one parameter, the "cost of public funds". Using a Mexican programme for illustration, we show that substantial welfare gains result from a switch from universal food subsidies to targeted transfers, reflecting both the improved targeting efficiency of the latter and the relaxation the trade-off between equity and efficiency when designing tax systems. Copyright 2004 Royal Economic Society.

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    Bibliographic Info

    Article provided by Royal Economic Society in its journal The Economic Journal.

    Volume (Year): 114 (2004)
    Issue (Month): 498 (October)
    Pages: 778-799

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    Handle: RePEc:ecj:econjl:v:114:y:2004:i:498:p:778-799

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    Cited by:
    1. Paul A. Dorosh & David Coady & Bart Minten, 2008. "Evaluating Alternative Approaches to Poverty Alleviation," IMF Working Papers 08/9, International Monetary Fund.
    2. Vaqar Ahmed & Cathal O'Donoghue, 2009. "External Shocks in a Small Open Economy: A CGE-Microsimulation Analysis," Working Papers 0142, National University of Ireland Galway, Department of Economics, revised 2009.
    3. Adato, Michelle & Hoddinott, John (ed.), 2010. "Conditional Cash Transfers in Latin America," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-8018-9498-5.
    4. Coady, David P. & Parker, Susan W., 2005. "Program participation under means-testing and self-selection targeting methods," FCND briefs 191, International Food Policy Research Institute (IFPRI).
    5. Michael Christian Lehman, 2014. "Long-Run Effects Of Conditional Cash Transfers," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 223, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].

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