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Poverty Analysis Within a General Equilibrium Framework

  • Decaluwe, B.
  • Patry, A.
  • Savard, L.
  • Thorbecke, E.

The main objective of this paper is to show how Social Accounting Matrices (SAM) and Computable General Equilibrium (CGE) Models can be used to highlight and address issues related to income distribution and poverty. The paper is divided into two major parts. Part 1 presents the concept of the SAM as a comprehensive, consistent and disaggregated data system and shows how the SAM methodology can be used to analyze issues related to income distribution and, in a much more limited way, poverty. Part 2 is devoted to the presentation of a CGE model calibrated on an archetype African SAM (same as above). One innovation in the specification of the present CGE is that it goes part way in endogenizing the poverty line and the resulting poverty incidence among the different socioeconomic household groups and representing income distribution with a flexible Beta distribution function and using the F-G-T additively decomposable class of poverty measures. The model is used to simulate the impact of two exogenous shocks (a fall in the price of the export crop and an import tariff reform) specifically on poverty.

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Paper provided by Laval - Recherche en Politique Economique in its series Papers with number 9909.

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Length: 58 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:lavape:9909
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  1. Huppi, Monika & Ravallion, Martin, 1990. "The sectoral structure of poverty during an adjustment period : evidence for Indonesia in the mid-1980s," Policy Research Working Paper Series 529, The World Bank.
  2. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-82, May.
  3. Thorbecke, Erik, 1991. "Adjustment, growth and income distribution in Indonesia," World Development, Elsevier, vol. 19(11), pages 1595-1614, November.
  4. Shoven, John B. & Whalley, John, 1972. "A general equilibrium calculation of the effects of differential taxation of income from capital in the U.S," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 281-321, November.
  5. Bourguignon, Francois & Fields, Gary, 1997. "Discontinuous losses from poverty, generalized P[alpha] measures, and optimal transfers to the poor," Journal of Public Economics, Elsevier, vol. 63(2), pages 155-175, January.
  6. Blackwood, D. L. & Lynch, R. G., 1994. "The measurement of inequality and poverty: A policy maker's guide to the literature," World Development, Elsevier, vol. 22(4), pages 567-578, April.
  7. Chia, Ngee-Choon & Wahba, Sadek & Whalley, John, 1994. "Poverty-Reducing Targeting Programmes: A General Equilibrium Approach," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 3(2), pages 309-38, October.
  8. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-51, September.
  9. Fortin, Bernard & Marceau, Nicolas & Savard, Luc, 1997. "Taxation, wage controls and the informal sector," Journal of Public Economics, Elsevier, vol. 66(2), pages 293-312, November.
  10. Thorbecke, Erik & Jung, Hong-Sang, 1996. "A multiplier decomposition method to analyze poverty alleviation," Journal of Development Economics, Elsevier, vol. 48(2), pages 279-300, March.
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