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Integrated Computable General Equilibrium (CGE) microsimulation approach

Author

Listed:
  • John Cockburn

    () (Poverty and Economic Policy (PEP) research network and Université Laval, Canada;)

  • Erwin Corong

    () (Centre of Policy Studies, Monash University, Australia;)

  • Caesar Cororaton

    () (Global Issues Initiative, Virginia Polytechnic University, USA;)

Abstract

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.

Suggested Citation

  • John Cockburn & Erwin Corong & Caesar Cororaton, 2010. "Integrated Computable General Equilibrium (CGE) microsimulation approach," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 60-71.
  • Handle: RePEc:ijm:journl:v:3:y:2010:i:1:p:60-71
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    File URL: http://ima.natsem.canberra.edu.au/IJM/V3_1/IJM_29.pdf
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Cogneau, Denis & Robilliard, Anne-Sophie, 2000. "Growth, distribution and poverty in Madagascar," TMD discussion papers 61, International Food Policy Research Institute (IFPRI).
    6. 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.
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    Citations

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    Cited by:

    1. Ole Boysen & Alan Matthews, 2017. "Will Economic Partnership Agreements Increase Poverty? The Case of Uganda," Review of Development Economics, Wiley Blackwell, vol. 21(2), pages 353-382, May.
    2. Andrew Feltenstein & Luciana Lopes & Janet Porras Mendoza & Sally Wallace, 2013. "“The Impact of Micro-simulation and CGE modeling on Tax Reform and Tax Advice in Developing Countries”: A Survey of Alternative Approaches and an Application to Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1309, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Maheshwar Rao & Robert Tanton & Yogi Vidyattama, 2013. "‘A Systems Approach to Analyse the Impacts of Water Policy Reform in the Murray-Darling Basin: a conceptual and an analytical framework’," NATSEM Working Paper Series 13/22, University of Canberra, National Centre for Social and Economic Modelling.
    4. Oleksandra Betliy & Veronika Movchan & Mykola Pugachov, 2013. "Poverty and social impact analysis of increased natural gas prices and selected social guarantees in Ukraine," Working Papers PMMA 2013-12, PEP-PMMA.
    5. Debowicz, Darío & Golan, Jennifer, 2014. "The impact of Oportunidades on human capital and income distribution in Mexico: A top-down/bottom-up approach," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 24-42.
    6. repec:eee:ecmode:v:68:y:2018:i:c:p:529-542 is not listed on IDEAS
    7. van Ruijven, Bas J. & O’Neill, Brian C. & Chateau, Jean, 2015. "Methods for including income distribution in global CGE models for long-term climate change research," Energy Economics, Elsevier, vol. 51(C), pages 530-543.
    8. Acharya, Sanjaya & Hölscher, Jens & Perugini, Cristiano, 2012. "Trade liberalisation and inequalities in Nepal: A CGE analysis," Economic Modelling, Elsevier, vol. 29(6), pages 2543-2557.

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    Keywords

    CGE; Nepal; Philippines; microsimulation; integrated; poverty;

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