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Assessing Modelling Approaches to the Distributional Effects of Macroeconomic Policy


  • Egor Kraev
  • Bishop Akolgo


This article outlines a set of desirable properties of an adequate model for assessing distributional impacts of macroeconomic policy packages, and uses these as criteria to evaluate four model types commonly used for such assessments, namely, fixed ratio, econometric, CGE and microsimulation models. The desirable properties fall into five broad groups: being able to represent policy levels used in the policy packages, allowing for both price- and quantity-clearing markets, integrating financial stocks, representing short-term dynamics, and providing measures of confidence in a model's output. Of the model types reviewed, CGE models perform the best on most criteria, in spite of their substantial flaws of non-verifiability and lack of short-term analysis. Copyright Overseas Development Institute, 2005.

Suggested Citation

  • Egor Kraev & Bishop Akolgo, 2005. "Assessing Modelling Approaches to the Distributional Effects of Macroeconomic Policy," Development Policy Review, Overseas Development Institute, vol. 23(3), pages 299-312, May.
  • Handle: RePEc:bla:devpol:v:23:y:2005:i:3:p:299-312

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    References listed on IDEAS

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    Cited by:

    1. Vaqar Ahmed & Cathal O'Donoghue, 2010. "External Shocks in a Small Open Economy: A CGE - Microsimulation Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(1), pages 45-90, Jan-Jun.
    2. Behrman, Jere R., 2009. "Analyzing the Distributional Impact of Reforms, Volume Two: A Practitioner's Guide to Pension, Health, Labor Market, Public Sector Downsizing, Taxation, Decentralization, and Macroeconomic Modeling. A," Journal of Pension Economics and Finance, Cambridge University Press, vol. 8(03), pages 396-397, July.
    3. Aline Coudouel & Stefano Paternostro, 2006. "Analyzing the Distributional Impact of Reforms : A Practitioner’s Guide to Pension, Health, Labor Markets, Public Sector Downsizing, Taxation, Decentralization, and Macroeconomic Modeling, Volume 2," World Bank Publications, The World Bank, number 7041.
    4. Essama-Nssah, B., 2005. "The poverty and distributional impact of macroeconomic shocks and policies : a review of modeling approaches," Policy Research Working Paper Series 3682, The World Bank.

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