DEPARTMENT OF ECONOMICS
EC 936: Development Policy Modelling: 2011-2012
Instructors: Jeffery Round and Mark Thomas
Office hours: Thursday 11.00-12.00 (Social Sciences 1.137)
Outline: The course will focus on the construction and use of computable partial and general
equilibrium models for economic policy analysis, especially in the context of developing
countries. The emphasis will be towards developing an understanding of the modelling
techniques as well as considering some examples of their practical application. The course
will begin with an introduction to understanding the macroeconomic accounts and statistical
base for economic modelling including some insights into the problems of data assembly.
This provides the necessary basis with which to consider a range of fixed price consistency
models, mainly input-output models and similar multiplier models for the analysis of the
distributional and structural impacts of policies. Most of the course will deal with
multisectoral computable general equilibrium (CGE) models and their application to key
areas in development policy.
Assessment: There will be an examination at the start of summer term which will count for
80% of the course grade. The remaining 20% will be split between an in-class presentation
and a homework exercise (due before 12 pm on February 29).
Please note there will be no class on February 20
Topics:
1.
Data, national accounts and Social Accounting Matrices
2.
Input-output analysis and consistency models
3.
Fixed price multiplier models and their applications in policy analysis
4.
Computable general equilibrium models: structure, calibration, closure rules
5.
Applications: models of trade and trade policy
6.
Applications: poverty, income distribution and redistribution
7.
Applications: structural change and economic reform
8.
Applications: regional models and global models
9.
Applications: environmental modelling
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Topics and reading list (* indicates required reading):
1. National Accounts, Input-output Tables and Social Accounting Matrices
*Reinert, K A and D W Roland-Holst (1997) ‘Social Accounting Matrices,’ in Francois and
Reinert (eds) Chapter 4: 94-121.
*Stone, R (1986) 'Nobel Memorial Lecture, 1984: The Accounts of Society', Journal of
Applied Econometrics, 10: 5-28.
Mankiw, N G (2010) Macroeconomics (seventh edition), Worth Publishers (Chapters 2 - 3).
King, B B (1985) ‘What is a SAM?’ Chapter 1 in G Pyatt and J I Round (eds) Social
Accounting Matrices: A Basis for Planning, World Bank, Washington DC, 1985.
Keuning, S and W de Ruijter (1988) ‘Guidelines for the Construction of a Social Accounting
Matrix,’ Review of Income and Wealth, Series 34 (1): 71-100.
Pyatt, Graham (1999) ‘Some Relationships between T-Accounts, Input-Output Tables and
Social Accounting Matrices,’ Economic Systems Research, 11 (4): 365-87
Thorbecke, E (1998) ‘Social Accounting Matrices and social accounting analysis,’in W Isard
(et al) Methods of Interregional and Regional Analysis,Ashgate, Chapter 7: sections 7.17.3, pp. 281-99.
2. Limited information techniques and the SAM
*Stone, R (1978) ‘Forward’ to G Pyatt, A Roe et al, Social Accounting for Development
Planning, Cambridge University Press, pp. xvi-xxxi.
*Round, J I (2003) ‘Constructing SAMs for Development Policy Analysis: Lessons Learned
and Challenges Ahead,’ Economic Systems Research, 15 (2): 161-183
*Miller, R E and P D Blair (2009) Input-Output Analysis: Foundations and Extensions,
Cambridge University Press (Chapter 7)
Byron, R P (1978) 'The Estimation of Large Social Account Matrices', Journal of the Royal
Statistical Society, Series A, 141 (3). (Read selectively)
Robinson, S., A Cattaneo, A. & M El-Said (2001) ‘Updating and estimating a social accounting
matrix using cross entropy methods,’ Economic Systems Research, 13: 47–64.
3. Input-output analysis and consistency models
*Miller, R E and P D Blair (2009) Input-Output Analysis: Foundations and Extensions,
Cambridge University Press (Chapter 2)
*Parikh A and D Bailey (1990) Techniques of Economic Analysis with Applications,
Harvester-Wheatsheaf (Chapter 7).
*Robinson S (1989) ‘Multisectoral Models,’ chapter 18 in Chenery and Srinivasan (Eds)
Handbook of Development Economics, Vol II, North Holland. (Sections 1,2 and 3)
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4. Fixed price multiplier models and applications in policy analysis
*Pyatt, G and J I Round (1979) ‘Accounting and Fixed Price Multipliers in a SAM
Framework.’ Economic Journal, 89: 850-873.
*Round, J I (2003) ‘Social Accounting Matrices and SAM-based Multiplier Analysis’ Chapter
14 in F Bourguignon and L A Pereira da Silva (eds), Techniques and Tools for Evaluating
the Poverty Impact of Economic Policies, World Bank and OUP: 301-324 [on-line at
ww.un.org/esa/policy/sanjose_training_mdgs/round_2003_sams_chapter14.pdf]
*Breisinger C, M Thomas, and J. Thurlow (2010), Social Accounting Matrices and Multiplier
Analysis: an introduction with exercises, IFPRI [on-line at
www.ifpri.org/publication/social-accounting-matrices-and-multiplier-analysis]
Hayden, C and J I Round (1982) ‘Developments in Social Accounting Methods as applied to
the analysis of income distribution and employment issues,’ World Development, 17:
1173-1201.
Defourny, J and E Thorbecke (1984) ‘Structural Path Analysis and Multiplier Decomposition
within a Social Accounting Matrix,’ Economic Journal, 94: 111-136.
Thorbecke, E (1998) ‘Social Accounting Matrices and social accounting analysis’, in W Isard
(et al) Methods of Interregional and Regional Analysis,Ashgate, Chapter 7: section 7.4,
pp. 300-16.
Thorbecke E and Hong-Sang Jung (1996) ‘A multiplier decomposition method to analyse
poverty alleviation,’ Journal of Development Economics, 48:2, 279-300.
Pyatt, G and J I Round (2006) ‘Multiplier Effects and the Reduction of Poverty,’ Chapter 12
in de Janvry and Kanbur, Poverty, Inequality and Development: Essays in Honor of Erik
Thorbecke, Springer, pp. 233-60.
5. Computable general equilibrium models: structure, functional form and closure rules
*Burfisher M E, Introduction to Computable General Equilibrium Models, Cambridge
University Press (Chapters 1-2)
*Parikh A and D Bailey (1990) Techniques of Economic Analysis with Applications,
Harvester-Wheatsheaf (Chapter 8).
*Robinson S. (2006) ‘Macro Models and Multipliers: Leontief, Stone, Keynes, and CGE
Models,’ Chapter 11 in de Janvry and Kanbur, Poverty, Inequality and Development:
Essays in Honor of Erik Thorbecke, Springer, pp. 205-32
Shoven J B and J. Whalley (1995) Applying General Equilibrium, Cambridge University
Press, Chapters 4-5
Devarajan S, D S Go, J D Lewis, S Robinson and P Sinko (1997) ‘Simple General
Equilibrium Modelling,’ in Francois and Reinert (eds) Chapter 6, pp. 156-185.
Gunning, J W and M Keyzer (1995) ‘Applied General Equilibrium Models for Policy
Analysis,’ in H B Chenery and T R Srinivasan (eds) Handbook of Development
Economics, Vol 3A., North Holland
Decaluwé, B., A. Martens and M. Monette (1988) ‘Macroclosures in Open Economy CGE
Models: A numerical Reappraisal,’ International Journal of Development Planning
Literature, 3(2): 69-90.
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6.
Applications: models of trade and trade policy
*Winters A (2004) ‘Trade liberalization and economic performance: an overview,’ The
Economic Journal, 114(493): F4-F21
*Cockburn J, E Corong, B Decaluwé, I Fofana and V Robichaud (2010) ‘The Growth and
Poverty Impacts of Trade Liberalization in Senegal,’ International Journal of
Microsimulation, 3(1): 109-113. http://www.microsimulation.org/IJM/V3_1/IJM_32.pdf
*Hertel, T and M Tsigas (1997) ‘Structure of GTAP,’ Chapter 2 in T W Hertel (ed), Global
Trade Analysis: Modeling and Applications, Cambridge University Press, pp. 13-73.
On-line at https://www.gtap.agecon.purdue.edu/resources/download/86.pdf
*Anderson, K and W Martin (2005) ‘Agricultural Trade Reform and the Doha Development
Agenda,’ The World Economy, 28 (9): 1301-1347.
Bittencourt, M V L, D Larson, D Kraybill (2010) ‘Regional Short-run effects of trade
liberalization in Brazil,’ Economic Systems Research, 22 (1): 65-85
Davies, R, J Rattso, and T Torvik (1994) 'Short-run consequences of trade liberalisation: a
computable general equilibrium model of Zimbabwe', Journal of Policy Modelling,
20(3): 305-333.
Tarp, F, D Roland-Holst, J Rand (2002) ‘Trade and Income Growth in Vietnam: Estimates
from a New Social Accounting Matrix,’ Economic Systems Research, 14 (2): 157-184
7.
Applications: income distribution and redistribution
*Savard, L (2005) ‘Poverty and Inequality Analysis in a CGE Framework: a Comparative
Analysis of the Representative Agent and Microsimulation Approaches’, Development
Policy Review, 23(3): 311-331.
*Robinson, S and H Lofgren (2005) ‘Macro Models and Poverty Analysis: Theoretical
Tensions and Empirical Practice’, Development Policy Review, 23(3): 267-283.
*Chia, N-C, S M Wahba and J Whalley (1992) ‘A General Equilibrium-Based Social Policy
Model for Cote d'Ivoire,’ Poverty and Social Policy Series, Paper No 2, World Bank,
Washington D C. (pdf file available)
Chia, N-C, S M Wahba and J Whalley (1994) ‘Assessing Poverty-reducing Programmes: a
General Equilibrium Approach,’ Journal of African Economies, 3(2): 309-338.
Bourguignon, F, M Bussolo and J Cockburn (2010) ‘Macro-micro analytics: background,
motivation, advantages and remaining challenges’, International Journal of
Microsimulation, 3(1): 1-7. [http://www.microsimulation.org/IJM/V3_1/IJM_24.pdf]
Lofgren, H, S Robinson and M El-Said (2003) ‘Poverty and Inequality Analysis in a General
Equilibrium Framework: The Representative Household Approach’, Chapter 15 in F
Bourguignon and L A Pereira da Silva (editors) Techniques and Tools for Evaluating the
Poverty Impact of Economic Policies, World Bank and OUP. (pdf file available)
Bourguignon, F, A-S Robilliard and S Robinson (2002) ‘Representative vs real households in
the macro-economic modelling of inequality’, International Food Policy Research
Institute . [http://basepub.dauphine.fr/xmlui/bitstream/123456789/4535/1/2003-10.pdf]
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8.
Applications: structural adjustment and economic reform
*Channing A, A Garcia, F Tarp, J Thurlow (2010) ‘Poverty Reduction and Economic
Structure: Comparative Path Analysis for Mozambique and Vietnam,’ World Institute for
Development Economics Research Working Paper No. 2010/122.
*Savard, L (2010) ‘Scaling Up Infrastructure Spending in the Philippines: A CGE Top-Down
Bottom-Up Microsimulation Approach,’ International Journal of Microsimulation, 3(1):
43-59. http://www.microsimulation.org/IJM/V3_1/IJM_28.pdf
*De Maio L, F Stewart, S van der Hoeven (1999) ‘Computable General Equilibrium Models,
Adjustment and the Poor in Africa,’ World Development, 27(3), 453-475.
Sahn, D E, P A Dorosh, and S D Younger (1996) ‘Exchange rate, fiscal, and agricultural
policies in Africa: does adjustment hurt the poor?’ World Development, 24(4): 719-748.
Roland-Holst, D and F Tarp (2006), ‘Globalization, Economic Reform, and Structural Price
Transmission: SAM Decomposition Techniques with an Empirical Application to
Vietnam,’ Chapter 14 in de Janvry and Kanbur, Poverty, Inequality and Development:
Essays in Honor of Erik Thorbecke, Springer: 287-307.
De Souza JB, F Filho, C dos Santos and S Lima (2010) ‘Tax Reform, Income Distribution and
Poverty in Brazil: an Applied General Equilibrium Analysis,’ International Journal of
Microsimulation, 3(1): 114-117. http://www.microsimulation.org/IJM/V3_1/IJM_33.pdf
8.
Applications: environmental modelling
*Xie, J and S. Saltzman (2000) ‘Environmental Policy Analysis: an environmental
computable general-equilibrium approach for developing countries,’ Journal of Policy
Modeling, 22 (4): 453-489.
*Bergman, L (2005) ‘CGE Modeling of Environmental Policy and Resource Management,’
Chapter 24 in Handbook of Environmental Economics , vol 3, North Holland, pp. 12731306.
*Devarajan, S (2000), ‘Can Computable Genral-Equilibrium Models shed light on the
environmental problems of developing countries?’ in P. Dasgupta and K G Maler (eds),
The Environment and Emerging Development Issues, Oxford University Press.
Li, J (2005), ‘Is There a Trade-Off Between Trade Liberalization and Environmental Quality?
A CGE Assessment on Thailand,’ Journal of Environment and Development, 14 (2):
252-277.
Miller, R E and P D Blair (2009) Input-Output Analysis: Foundations and Extensions,
Cambridge University Press (Chapters 9, 10)
Perroni C. and R.Wigle (1997) 'Environmental policy modeling,' in T. Hertel (ed.), Global
Trade Analysis: modeling and applications. Cambridge University Press, pp. 305-320.
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