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How Can Tax Policies And Macroeconomic Shocks Affect The Poor? A Quantitative Assessment Using A Computable General Equilibrium Framework For Colombia

  • CLAUDIO R KARL

    ()

During the past decade, particularly after the 1998-99 Colombian economic recession, economists have developed a renewed interest in the analysis and evaluation of welfare changes induced by public policies and economic shocks. The existing instruments to do this kind of exercises have usually lacked or excluded detailed microeconomic information that is relevant in the understanding and determination of the channels through which macroeconomic shocks affect the income distribution structure in Colombia. As a result, this research intends to fulfill this gap by presenting a simple static applied general equilibrium model in which a micro-macro link was built by reconciling the 1997 quality of life survey data with aggregates of the national accounts system. Specifically, by introducing a set of 8,701 households within a consistent macroeconomic framework, the model is able to produce poverty and income distribution indicators for specific segments of the population in four simulated scenarios: a reduction of tariffs, a general VAT rate for all products, a fall of the foreign inflows and a rise of the government obligations with the rest of the world. Despite the simple Arrow-Debreu structure implemented here, the estimated results are qualitatively and quantitatively important, specially in measuring the inequality and poverty changes that can arise as response of exogenous shocks.

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Article provided by BANCO DE LA REPÚBLICA - ESPE in its journal ENSAYOS SOBRE POLÍTICA ECONÓMICA.

Volume (Year): (2004)
Issue (Month): (December)
Pages:

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Handle: RePEc:col:000107:002796
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  1. Thomas F. Rutherford & Miles K. LIGHT, 2002. "A General Equilibrium Model for Tax Policy Analysis in Colombia: The MEGATAX Model," ARCHIVOS DE ECONOMÍA 011291, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  2. Davies, James B., 2004. "Microsimulation, CGE and Macro Modelling for Transition and Developing Economies," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. John Cockburn, 2002. "Trade Liberalisation and Poverty in Nepal A Computable General Equilibrium Micro Simulation Analysis," Economics Series Working Papers WPS/2002-11, University of Oxford, Department of Economics.
  4. Claudio René KARL ESTUPIÑAN, 2004. "A real Financial Social Accounting Matrix for Colombia," ARCHIVOS DE ECONOMÍA 001930, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  5. Anne-Sophie Robilliard & Sherman Robinson, 2003. "Reconciling Household Surveys and National Accounts Data Using a Cross Entropy Estimation Method," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(3), pages 395-406, 09.
  6. Decaluwé, Bernard & Patry, André & Savard, Luc, 1998. "Income Distribution, Poverty Measures and Trade Shocks: A Computable General Equilibrium Model of a Archetype Developing Country," Cahiers de recherche 9812, Université Laval - Département d'économique.
  7. Victor Ginsburgh & Michiel Keyzer, 2002. "The structure of applied general equilibrium models," ULB Institutional Repository 2013/3313, ULB -- Universite Libre de Bruxelles.
  8. Hernandez, Gustavo Adolfo & Prada, Sergio & Ramirez, Juan Mauricio, 2001. "Impacto Económico del programa de Desarrollo Alternativo del Plan Colombia
    [Economic Impact of Plan Colombia's Alternative Development Program]
    ," MPRA Paper 17844, University Library of Munich, Germany.
  9. Löfgren, Hans & Harris, Rebecca Lee & Robinson, Sherman, 2001. "A standard computable general equilibrium (CGE) model in GAMS," TMD discussion papers 75, International Food Policy Research Institute (IFPRI).
  10. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550.
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