Measuring Poverty and Inequality in a Computable General Equilibrium Model
This paper aims to evaluate the relevance of different types of macroeconomic general equilibrium modelling for measuring the impact of economic policy shocks on the incidence of poverty and on the distribution of income. In the literature three approaches are identified. The first is based on a traditional form of the CGEM which specifies a large number of households. In this case, we can only observe inter group income inequalities. The next uses survey data to estimate the distribution function and average variations by group, which allows one to estimate the evolution of poverty. The third approach, which we present in detail, includes individual data directly in the general equilibrium model according to the principles of micro simulations. This treatment provides a more reliable picture of income distribution but is also more complex. Given this, we develop, within a co-ordinated statistical framework representing an archetypal economy, the three types of model described above. More precisely, this exercise allows us to break down the contribution of average income variations, of the poverty line, and of income distribution in the evolution of the main poverty indicators. The results obtained show the importance of intra group information and therefore the relevance of micro simulation exercises.
|Date of creation:||2000|
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- 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 309-338, October.
- 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 1007-1051, September.
- 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.
- John B. Shoven & John Whalley, 1972. "A General Equilibrium Calculation of the Effects of Differential Taxation of Income from Capital in the U.S," Cowles Foundation Discussion Papers 328, Cowles Foundation for Research in Economics, Yale University.
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