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Fiscal Adjustment, Poverty, Inequality and Welfare in Côte d’Ivoire: A CGE Model Analysis

By Bédia F. Aka

Abstract

Trade liberalization and adoption of external common tariff in WAEMU countries result in a decrease in external fiscal receipt of the government. This paper attempts to quantify the impacts of the fiscal adjustment necessary to compensate this drop on income distribution and poverty in Côte d'Ivoire. We analyse income distribution for various homogenous socio-economic groups using an absolute poverty line based on constant basic needs approach. Following the elimination of taxes on agricultural and industrial exports and imports we simulate and analyse in a CGE model, the effects of a change in the fiscal system on poverty, inequality and welfare. The results show that poverty increase for all the households, but the situation is more diversified among the socio economic groups. Trade liberalization leads to an increase in agricultural and industrial domestic prices, resulting in an increase of taxes and a decrease of households disposable income, and thus of their welfare. Public employees are actually identified as the most concerned with poverty

Year: 2003
OAI identifier: oai:CiteSeerX.psu:10.1.1.199.6002
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