Integrated Computable General Equilibrium (CGE) microsimulation approach
Conventionally, the analysis of macro-economic shocks and the analysis of income distribution and poverty require very different methodological techniques and sources of data. Over the last decade however, the natural divide between both approaches has diminished, as evaluating the impact of macro-economic shocks on poverty and income distribution within a CGE framework complemented by household survey data has flourished. This paper focuses on explicitly integrating into a CGE model each household from a nationally representative household survey. The aim of this paper is threefold. First, we show that explicitly modelling each household in the CGE model addresses Kirman‘s critique (1992) and overcomes the strong micro-economic assumption of representative agent. Second, we respond, albeit in a simple way, to the recommendation of Bourguignon and Perreira (2003) to integrate ? real? households within a CGE framework rather than using representative households. Third, by providing applications to Nepal and the Philippines, we demonstrate that this technique is straightforward to implement and requires only a standard CGE model and a nationally representative household survey with information on household income and consumption.
References listed on IDEAS
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- Cogneau, Denis & Robilliard, Anne-Sophie, 2000. "Growth, distribution and poverty in Madagascar," TMD discussion papers 61, International Food Policy Research Institute (IFPRI).
- Thomas W. Hertel & Jeffrey J. Reimer, 2006.
"Predicting the Poverty Impacts of Trade Reform,"
QA - Rivista dell'Associazione Rossi-Doria,
Associazione Rossi Doria, issue 2, May.
- Thomas Hertel & Jeffrey Reimer, 2005. "Predicting the poverty impacts of trade reform," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(4), pages 377-405.
- Decaluwé, Bernard & Dumont, Jean-Christophe & Savard, Luc, 2000. "Measuring Poverty and Inequality in a Computable General Equilibrium Model," Cahiers de recherche 9926, Université Laval - Département d'économique.
- Dorothée Boccanfuso & Bernard Decaluwé & Luc Savard, 2003. "Poverty, Income Distribution and CGE Modeling: Does the Functional Form of Distribution Matter?," Cahiers de recherche 0332, CIRPEE.
- John Cockburn, 2004.
"Trade Liberalisation and Poverty in Nepal A Computable General Equilibrium Micro Simulation Analysis,"
Development and Comp Systems
- John Cockburn, 2002. "Trade Liberalisation and Poverty in Nepal: A Computable General Equilibrium Micro Simulation Analysis," CSAE Working Paper Series 2002-11, Centre for the Study of African Economies, University of Oxford.
- François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications, The World Bank, number 6586, February.
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