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A GENERAL EQUILIBRIUM-BASED SOCIAL POLICY MODEL FOR CÔTE D´IVOIRE

A GENERAL EQUILIBRIUM-BASED SOCIAL POLICY MODEL FOR CÔTE D´IVOIRE. Ngee-Choon Chia Sadek M. Wahba John Whalley. 1992. Introduction Social Policy model Poverty-reduction targeting programs Conclusions. Outline. INTRODUCTION. ECONOMY Population : 12 million (1989) French Colony

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A GENERAL EQUILIBRIUM-BASED SOCIAL POLICY MODEL FOR CÔTE D´IVOIRE

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  1. A GENERAL EQUILIBRIUM-BASED SOCIAL POLICY MODEL FORCÔTE D´IVOIRE Ngee-ChoonChia Sadek M. Wahba John Whalley 1992

  2. Introduction • Social Policymodel • Poverty-reductiontargetingprograms • Conclusions Outline

  3. INTRODUCTION

  4. ECONOMY • Population: 12 million (1989) • French Colony • Key Member of the West AfricanMonetaryUnion SOCIAL POLICY MODEL CÔTE D´IVOIRE

  5. General EquilibriumModel • Objective: • Assessment of the social consequences of theadjustmentprogramssince 1981. • Characteristics: • Basedon SAM • Focusesonincomesand distribution • Operation of theunderlying real economy • Predictions of whatislikelytohappenwhenchanges are introduced. • Weaknesses: • Doesn´t capture macro imbalances • Can´t capture effectsoninfraestructure and social development(education, health) SOCIAL POLICY MODEL CÔTE D´IVOIRE

  6. SOCIAL POLICY MODEL CÔTE D´IVOIRE

  7. SOCIAL POLICY MODEL CÔTE D´IVOIRE

  8. ArmingtonAssumption • Final productstradedinternationally are differentiatedonthebasis of thelocation of production • In one country eachindustry produces onlyoneproduct – thisisdistinctfromtheproduct of thesameindustryfromanother country • Accomodates ‘Cross-hauling’ – a problem in CGE models Armington

  9. SOCIAL POLICY MODEL

  10. Incidence of Taxes

  11. Effectiveness of Poverty-ReducingTargetingPrograms

  12. Poverty-ReducingTargetingprograms Anytranferschemeto reduce povertywill be at expense of someothergovernementexpenditure (trade-off) • Social expenditurePrograms = highest share of total governmentexpenditure

  13. Poverty-ReducingTargetingprograms

  14. Poverty-ReducingTargetingprograms

  15. Poverty-ReducingTargetingprograms PERFECT TARGETING Poverty Line

  16. Poverty-ReducingTargetingprograms UNIVERSAL TARGETING

  17. Poverty-Reducing Targeting programs Amount needed to eliminate poverty (T)

  18. Poverty-Reducing Targeting programs UNIVERSAL TARGETING PERFECT TARGETING In the case of perfecttargetingtheporverty-reductionprogramwouldrepresent3% of GDP

  19. GENERAL EQUILIBRIUM ANALYSIS • Targeting programs would shift the function upwards • Funds distributed to all households simultaneously or individually

  20. GENERAL EQUILIBRIUM ANALYSIS

  21. GENERAL EQUILIBRIUM ANALYSIS • GE effects • UniversalisticApproach Tranfer: Tax:

  22. GENERAL EQUILIBRIUM ANALYSIS

  23. GENERAL EQUILIBRIUM ANALYSIS Universal Targeting vs. Individual targeting Individual Total poverty for the group not eliminated Effects the final income of other households through inter-house transfers Universal • Better for agricultural households • Has the greater poverty reducing effect (if directed to correct households) • Leakage effects

  24. GENERAL EQUILIBRIUM ANALYSIS • Size of Transfer

  25. GENERAL EQUILIBRIUM ANALYSIS • PoliticalImplications

  26. CONCLUSION

  27. QUESTIONS?

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