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Shocks, Policy Reforms and Pro-Poor Growth in Bolivia: A Simulation Analysis

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  • Jann Lay
  • Rainer Thiele
  • Manfred Wiebelt

Abstract

This paper analyzes how major external shocks and policy reforms affect Bolivia's ability to achieve pro-poor growth. Employing a recursive-dynamic CGE model, it considers three different scenarios: an optimistic baseline scenario; a more realistic scenario that accounts for two important negative external shocks (declining capital inflows and El Niño); and a scenario that captures the combined effect of the shocks and two major reform projects (development of the gas sector and deregulation of the urban labor market). It turns out that the shocks are likely to impair Bolivia's medium-term development prospects, leading to marked increases in both urban and rural poverty. If the reform projects were implemented, the poverty increase caused by the shocks would be more than offset for urban households, but reinforced for rural households. Copyright © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Jann Lay & Rainer Thiele & Manfred Wiebelt, 2008. "Shocks, Policy Reforms and Pro-Poor Growth in Bolivia: A Simulation Analysis," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 37-56, February.
  • Handle: RePEc:bla:rdevec:v:12:y:2008:i:1:p:37-56
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    References listed on IDEAS

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    1. Government of Bolivia & Gobierno de Bolivia, 2001. "Bolivia: Poverty Reduction Strategy," IDB Publications (Working Papers) 80367, Inter-American Development Bank.
    2. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 3338, Inter-American Development Bank.
    3. repec:idb:brikps:publication-detail,7101.html?id=68558 is not listed on IDEAS
    4. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    5. Government of Bolivia & Gobierno de Bolivia, 2001. "Bolivia: Poverty Reduction Strategy," IDB Publications (Working Papers) 4412, Inter-American Development Bank.
    6. Wiebelt, Manfred, 2004. "GEM-PIA: A real-financial general equilibrium model for poverty impact analysis technical description," Kiel Working Papers 1230, Kiel Institute for the World Economy (IfW).
    7. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," Research Department Publications 4293, Inter-American Development Bank, Research Department.
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    Cited by:

    1. Peter Nunnenkamp & Rainer Schweickert & Manfred Wiebelt, 2007. "Distributional Effects of FDI: How the Interaction of FDI and Economic Policy Affects Poor Households in Bolivia," Development Policy Review, Overseas Development Institute, vol. 25(4), pages 429-450, July.
    2. repec:zbw:ifwkie:4251 is not listed on IDEAS
    3. Aliaga Lordemann, Jevier & Villegas Quino, Horacio, 2011. "Poverty, Indigence and Public Investment in Bolivia: A Simulation Analysis," Documentos de trabajo 5/2011, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.

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