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The Effects of DR-CAFTA in Nicaragua A CGE-Microsimulation Model for Poverty and Inequality Analysis

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  • Colombo, Giulia
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    Abstract

    In this paper, we build a Computable General Equilibrium (CGE)-microsimulation model for the economy of Nicaragua following the Top-Down approach (see Bourguignon et al., 2003), that is, the reform is simulated first at the macro level with the CGE model, and then it is passed onto the microsimulation model through a vector of changes in some chosen variables, such as prices, wage rates, and unemployment levels. This approach appears to be particularly suited to the policy reform we are willing to simulate with the model: the Free Trade Agreement of Central America with the USA is mainly a macroeconomic reform, which on the other hand can have important effects on the distribution of income. With such a model we try to study the possible changes in the distribution of income deriving from the Free Trade Agreement with USA. Our analysis finds only small changes both in the main macroeconomic variables and in the distribution of income and poverty indices. --

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    Bibliographic Info

    Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Zurich 2008 with number 6.

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    Date of creation: 2008
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    Handle: RePEc:zbw:gdec08:6

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    Related research

    Keywords: CGE models; microsimulation; income distribution;

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    References

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    1. John Creedy & Guyonne Kalb, 2003. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Treasury Working Paper Series 03/20, New Zealand Treasury.
    2. François Bourguignon & Anne-Sophie Robilliard & Sherman Robinson, 2003. "Representative versus real households in the macro-economic modeling of inequality," DELTA Working Papers, DELTA (Ecole normale supérieure) 2003-05, DELTA (Ecole normale supérieure).
    3. Arntz, Melanie & Boeters, Stefan & Gürtzgen, Nicole & Schubert, Stefanie, 2008. "Analysing welfare reform in a microsimulation-AGE model: The value of disaggregation," Economic Modelling, Elsevier, Elsevier, vol. 25(3), pages 422-439, May.
    4. Caesar B. Cororaton & John Cockburn, 2005. "Trade Reform and Poverty in the Philippines: a Computable General Equilibrium Microsimulation Analysis," Cahiers de recherche, CIRPEE 0513, CIRPEE.
    5. Davies, James B., 2004. "Microsimulation, CGE and Macro Modelling for Transition and Developing Economies," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    6. Maurizio Bussolo & Jann Lay, 2003. "Globalisation and Poverty Changes in Colombia," OECD Development Centre Working Papers 226, OECD Publishing.
    7. John Cockburn, 2004. "Trade Liberalisation and Poverty in Nepal A Computable General Equilibrium Micro Simulation Analysis," Development and Comp Systems 0409012, EconWPA.
    8. Luc Savard, 2003. "Poverty and Income Distribution in a CGE-Household Micro-Simulation Model: Top-Down/Bottom Up Approach," Cahiers de recherche, CIRPEE 0343, CIRPEE.
    9. Creedy, John & Duncan, Alan, 2002. " Behavioural Microsimulation with Labour Supply Responses," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 16(1), pages 1-39, February.
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    Cited by:
    1. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, Elsevier.

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