| By: |
Nabil Annabi;
Fatou Cissé;
John Cockburn;
Bernard Decaluwé |
| Abstract: |
Much current debate focuses on the role of growth in alleviating poverty.
However, the majority of computable general equilibrium (CGE) models used in
poverty and inequality analysis are static in nature. The inability of this
kind of model to account for growth (accumulation) effects makes them
inadequate for long run analysis of the poverty and inequality impacts of
economic policies. They exclude accumulation effects and do not allow the
study of the transition path of the economy where short run policy impacts are
likely to be different from those of the long run. To overcome this limitation
we use a sequential dynamic CGE microsimulation model that takes into account
accumulation effects and makes it possible to study poverty and inequality
through time. Changes in poverty are then decomposed into growth and
distribution components in order to examine whether de-protection and factor
accumulation are pro-poor or not. The model is applied to Senegalese data
using a 1996 social accounting matrix and a 1995 survey of 3278 households.
The main findings of this study are that trade liberalisation induces small
increases in poverty and inequality in the short run as well as contractions
in the initially protected agriculture and industrial sectors. In the long
run, it enhances capital accumulation, particularly in the service and
industrial sectors, and brings substantial decreases in poverty. However, a
decomposition of poverty changes shows that income distribution worsens, with
greater gains among urban dwellers and the non-poor. |
| Keywords: |
Dynamic CGE model, trade liberalisation, poverty, inequality, Senegal |
| JEL: |
D33 D58 E27 F17 I32 O15 O55 |
| Date: |
2005 |
| URL: |
http://d.repec.org/n?u=RePEc:lvl:lacicr:0512&r=afr |