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Evaluating transfer programmes within a general equilibrium framework

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  • David P. Coady
  • Rebecca L. Harris

Abstract

We develop a general equilibrium model for evaluating domestically financed transfer programmes and derive analytical expressions which provide a framework for combining results from a computable general equilibrium model with disaggregated household data. We separate the welfare impact into three components, i.e. "redistribution", "reallocative", and "distortionary" effects. We show how these are subsumed within one parameter, the "cost of public funds". Using a Mexican programme for illustration, we show that substantial welfare gains result from a switch from universal food subsidies to targeted transfers, reflecting both the improved targeting efficiency of the latter and the relaxation the trade-off between equity and efficiency when designing tax systems. Copyright 2004 Royal Economic Society.

Suggested Citation

  • David P. Coady & Rebecca L. Harris, 2004. "Evaluating transfer programmes within a general equilibrium framework," Economic Journal, Royal Economic Society, vol. 114(498), pages 778-799, October.
  • Handle: RePEc:ecj:econjl:v:114:y:2004:i:498:p:778-799
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    Cited by:

    1. Michael Lechner & Conny Wunsch, 2009. "Are Training Programs More Effective When Unemployment Is High?," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 653-692, October.
    2. 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.
    3. Coady, David P. & Parker, Susan W., 2005. "Program participation under means-testing and self-selection targeting methods," FCND discussion papers 191, International Food Policy Research Institute (IFPRI).
    4. Michael Christian Lehman, 2014. "Long-Run Effects Of Conditional Cash Transfers," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 223, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Peters, Jörg & Langbein, Jörg & Roberts, Gareth, 2017. "Generalization in the Tropics: Development policy, randomized controlled trials, and external validity," Ruhr Economic Papers 716, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Paul A. Dorosh & David Coady & Bart Minten, 2008. "Evaluating Alternative Approaches to Poverty Alleviation; Rice Tariffs Versus Targeted Transfers in Madagascar," IMF Working Papers 08/9, International Monetary Fund.
    7. David P. Coady & Susan W. Parker, 2009. "Targeting Performance under Self-selection and Administrative Targeting Methods," Economic Development and Cultural Change, University of Chicago Press, vol. 57(3), pages 559-587, April.
    8. Dietrich, Stephan & Malerba, Daniele & Barrientos, Armando & Gassmann, Franziska, 2017. "Rates of return to antipoverty transfers in Uganda," MERIT Working Papers 040, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Alderman, Harold & Behrman, Jere R. & Tasneem, Afia, 2015. "The contribution of increased equity to the estimated social benefits from a transfer program: An illustration from PROGRESA:," IFPRI discussion papers 1475, International Food Policy Research Institute (IFPRI).
    10. Adato, Michelle & Hoddinott, John (ed.), 2010. "Conditional Cash Transfers in Latin America," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-8018-9498-5, September.

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