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• Luc Savard
• Bernard Decaluwe

This paper aims to evaluate the relevance of different types of macroeconomic general equilibrium modelling for measuring the impact of economic policy shocks on the incidence of poverty and on the distribution of income. In the literature three approaches are identified. The first is based on a traditional form of the CGEM which specifies a large number of households. In this case, we can only observe inter group income inequalities. The next uses survey data to estimate the distribution function and average variations by group, which allows one to estimate the evolution of poverty. The third approach, which we present in detail, includes individual data directly in the general equilibrium model according to the principles of micro simulations. This treatment provides a more reliable picture of income distribution but is also more complex. Given this, we develop, within a co-ordinated statistical framework representing an archetypal economy, the three types of model described above. More precisely, this exercise allows us to break down the contribution of average income variations, of the poverty line, and of income distribution in the evolution of the main poverty indicators. The results obtained show the importance of intra group information and therefore the relevance of micro simulation exercises.

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Paper provided by Université Laval - Département d'économique in its series Cahiers de recherche with number 9926.

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Date of creation: 2000
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Handle: RePEc:lvl:laeccr:9926

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Keywords: General Equilibrium Models; Micro Simulation; Poverty; Inequality;

Find related papers by JEL classification:
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

This paper has been announced in the following NEP Reports:

• NEP-ALL-2002-04-15 (All new papers)
• NEP-CMP-2002-04-15 (Computational Economics)
• NEP-LTV-2002-04-03 (Unemployment, Inequality & Poverty)

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This page was last updated on 2009-11-19.