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Distributional Effects of Adjustment Policies: Simulations for Archetype Economies in Africa and Latin America

In: Modeling Developing Countries' Policies in General Equilibrium

Author

Listed:
  • François Bourguignon
  • Jaime de Melo
  • Akiko Suwa

Abstract

For developing countries the 1980s was a decade of external shocks whose adverse effects were compounded by domestic macroeconomic imbalances and structural inefficiencies. The performance of developing countries during this decade, however, was not uniform. The effects of terms of trade and interest rate shocks are simulated for two model economies, one representing an average Latin American economy and the other representing an average African economy. In addition to the effects of the shocks, the effects of different adjustment policies are examined. As expected, identical shocks and adjustment packages yield different outcomes for growth, poverty, and income distribution in the two economies. The differences in results can be traced to specific features of the models, and, to the extent that the archetypes created are representative of real economies, have implications for adjustment policy prescriptions.

Suggested Citation

  • François Bourguignon & Jaime de Melo & Akiko Suwa, 2015. "Distributional Effects of Adjustment Policies: Simulations for Archetype Economies in Africa and Latin America," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 11, pages 243-270, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789814494816_0011
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    Cited by:

    1. Pierre‐Richard Agénor, 2004. "Macroeconomic Adjustment and the Poor: Analytical Issues and Cross‐Country Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 18(3), pages 351-408, July.
    2. Emmanuel Athanassiou & Christos Kollias & Stavros Zografakis, 2002. "The Effects of Defence Spending Reductions: A CGE Estimation of the Foregone Peace Dividend in the Case of Greece," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(2), pages 109-119.
    3. Jane Harrigan, 1996. "Review Article – The Bretton Woods Institutions in Developing Countries: Bétes Noires or Toothless Tigers?," The World Economy, Wiley Blackwell, vol. 19(6), pages 765-779, November.
    4. Ngee-Choon Chia & Wahba, Sadek & Whalley, John, 1992. "A general equilibrium based social policy model for Cote d'Ivoire," Policy Research Working Paper Series 925, The World Bank.
    5. Breisinger, Clemens & Ecker, Olivier, 2014. "Simulating economic growth effects on food and nutrition security in Yemen: A new macro–micro modeling approach," Economic Modelling, Elsevier, vol. 43(C), pages 100-113.
    6. Buffie, Edward F. & Won, Yongkul, 2001. "Devaluation and investment in an optimizing model of the small open economy," European Economic Review, Elsevier, vol. 45(8), pages 1461-1499, August.
    7. Alain Zantman, 1995. "Modèles d'équilibre général calculable et répartition des revenus dans les PED : quelques éléments d'évaluation," Revue Tiers Monde, Programme National Persée, vol. 36(142), pages 411-442.
    8. Thomas W. Hertel & Jeffrey J. Reimer, 2006. "Predicting the Poverty Impacts of Trade Reform," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.

    More about this item

    Keywords

    Applied General Equilibrium Models; Trade Policy; Computable General Equilibrium; Archetypes;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F00 - International Economics - - General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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