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A standard computable general equilibrium model for South Africa

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  • Thurlow, James
  • van Seventer, Dirk Ernst

Abstract

"The paper reports on the construction and testing of a Standard International Food Policy Research Institute (IFPRI) computable general equilibrium model for South Africa. A 1998 social accounting matrix (SAM) for South Africa is compiled using national accounts information and recently released supply-use tables. By updating to a recent year, and by distinguishing between producers and commodities, this SAM is an improvement on the existing SAM databases for South Africa. Furthermore, this SAM is made consistent with the requirements of IFPRI's standard comparative static computable general equilibrium (CGE) model. This model is then used to simulate the economy-wide impact of a range of hypothetical policy levers, including: increased government spending; the elimination of tariff barriers; and an improvement in total factor productivity. Results indicate that assumptions made regarding the mechanisms of macroeconomic adjustment are important in determining the expected impacts of these policies. Firstly, despite mixed results concerning changes in household income distribution, the impact of expansionary fiscal policy appears to be growth enhancing, with the Keynesian style adjustment mechanism producing the most positive results. Secondly, a complete abolition of import tariffs also appears to generate increases in gross domestic product, with negative and positive consequences for aggregate manufacturing and services respectively. Finally, an increase in total factor productivity is growth enhancing, with the most positive results derived under neoclassical assumptions of the macroeconomic adjustment mechanisms. These simulations are meant to demonstrate the usefulness for economy-wide policy modelling and the paper concludes by highlighting areas of policy analysis that might benefit from more detailed applications with this framework." Author's Abstract.

Suggested Citation

  • Thurlow, James & van Seventer, Dirk Ernst, 2002. "A standard computable general equilibrium model for South Africa," TMD discussion papers 100, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:tmddps:100
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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. B. Gibson & D.E.N. Seventer, 1997. "The Macroeconomic Impact of Restructuring Public Expenditure by Function in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 65(2), pages 89-103, June.
    3. Cogneau, Denis & Robilliard, Anne-Sophie, 2000. "Growth, distribution and poverty in Madagascar," TMD discussion papers 61, International Food Policy Research Institute (IFPRI).
    4. W.A. Naudé & P. Brixen, 1993. "On a Provisional Computable General Equilibrium Model for South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 61(3), pages 219-226, September.
    5. Brixen, Peter & Tarp, Finn, 1996. "South Africa: Macroeconomic perspectives for the medium term," World Development, Elsevier, vol. 24(6), pages 989-1001, June.
    6. 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).
    7. Adelman, Irma & Robinson, Sherman, 1988. "Macroeconomic adjustment and income distribution : Alternative models applied to two economies," Journal of Development Economics, Elsevier, vol. 29(1), pages 23-44, July.
    8. Z. R. Coetzee & K. Kwarada & W. Naude & J. Swanepoel, 1997. "Currency Depreciation, Trade Liberalisation and Economic Development," South African Journal of Economics, Economic Society of South Africa, vol. 65(2), pages 78-88, June.
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    Keywords

    Computable general equilibrium (CGE) ;

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