Decomposing the Effects of Economic Policies on Poverty Trends in Cameroon: A Double Calibration Micro Simulated General Equilibrium Analysis

This paper aims at bringing out the determinants of the significant poverty alleviation observed in Cameroon between 1993 and 2001. It focuses on the decomposition of poverty and growth changes, in order to assess the intrinsic contribution of each major economic policy implemented in Cameroon during this period. A double calibration technique, within a micro-simulated computable general equilibrium model was used to that effect. Findings obtained reveal that the devaluation, the rehabilitation of infrastructures, and the VAT enforcement respectively contributed for two percent, 9 percent and -4 percent in the poverty alleviation; for one percent, 11 percent, and three percent in explaining GDP growth; and for 65 percent, zero percent and 11 percent in the rise of the consumer price index (CPI). Beside revealing the intrinsic impacts of aforementioned policies, the double calibration approach made it possible to realize that technological changes arose between 1993 and 2001 alone stand to explain up to 31 percent of the nationwide decline in poverty, 45 percent of the GDP growth, and 4 percent of the CPI increase. The notion of technological changes refers here to changes occurred across the time in the values of scale parameters contained in production and product differentiation functions.Double calibration, Impacts decomposition, Micro simulation, Devaluation, CGE models, Technological changes, Tax and Customs reforms, Basic infrastructure.

The poverty impacts of the Doha Round in Cameroon : the role of tax policy

The authors aim to assess the possible impacts of the Doha Round of negotiations on poverty in Cameroon. During the recent period of economic recovery, Cameroon enjoyed a sharp decline in poverty, with the headcount index falling from 53.3 percent of inhabitants in 1996 to 40.2 percent in 2001, mostly due to economic growth rather than redistribution. Will the current trade negotiations under the Doha Round reinforce or curb this trend? They apply a computable general equilibrium (CGE) microsimulation model that involves 10,992 households in order to address this question. The authors find the Doha Round to be poverty-reducing for Cameroon. For the whole country, the estimate of the net number of people who are lifted out of poverty is 22,000 following this scenario. Further investigations indicate that more ambitious world trade liberalization leads to greater poverty alleviation at the national level, while Cameroon's domestic trade liberalization has adverse poverty and inequality impacts-despite giving rise to higher aggregate welfare. Under the Doha scenario, the cuts in Cameroon's tariffs are very small (the average tariff rate moves from 11.79 percent in the base run to merely 11.66 percent) so that world trade liberalization effects on prices more than offset the adverse own liberalization effects in this scenario. If the rest of the world and Cameroon full trade liberalizations are combined, the adverse impacts of own liberalization outweigh the favorable outcomes of the world trade liberalization. The results suggest furthermore that the choice of tax replacement instrument can have an important bias in poverty impacts: poverty gets worse in the country case study when using an imperfect value-added tax instead of a neutral replacement tax to compensate lost tariff revenue, and gets even worse when using a consumption tax. Key reasons here are the supplementary distortions which are nil in case of a neutral tax and greatest in the case of a consumption tax. In addition, accompanying measures should be considered to avoid poverty increases in the framework of Economic Partnership Agreements currently in negotiation between African, Caribbean, and Pacific (ACP) countries and the European Union, which propose a drastic dismantlement of ACP tariffs over the next few years.Rural Poverty Reduction,Economic Theory&Research,Free Trade,Poverty Assessment,Achieving Shared Growth

Decomposing the Effects of Economic Policies on Poverty Trends in Cameroon: A Double Calibration Micro Simulated General Equilibrium Analysis

This paper aims at bringing out the determinants of the significant poverty alleviation observed in Cameroon between 1993 and 2001. It focuses on the decomposition of poverty and growth changes, in order to assess the intrinsic contribution of each major economic policy implemented in Cameroon during this period. A double calibration technique, within a micro-simulated computable general equilibrium model was used to that effect. Findings obtained reveal that the devaluation, the rehabilitation of infrastructures, and the VAT enforcement respectively contributed for two percent, 9 percent and -4 percent in the poverty alleviation; for one percent, 11 percent, and three percent in explaining GDP growth; and for 65 percent, zero percent and 11 percent in the rise of the consumer price index (CPI). Beside revealing the intrinsic impacts of aforementioned policies, the double calibration approach made it possible to realize that technological changes arose between 1993 and 2001 alone stand to explain up to 31 percent of the nationwide decline in poverty, 45 percent of the GDP growth, and 4 percent of the CPI increase. The notion of technological changes refers here to changes occurred across the time in the values of scale parameters contained in production and product differentiation functions

Dynamic of non monetary poverty in Cameroon between 2001 and 2007: multiple component analysis and stochastic dominance tests

The aim of the present study is to investigate on non monetary poverty in Cameroon, focusing on the dynamic of poverty profiles in urban and rural areas, and all over the whole country between 2001 and 2007.Poverty persistence explains the interest and the stakes of the current study. By using data coming from the last two Cameroonians surveys on households standards livings conducted respectively in 2001 (ECAM II) and in 2007 (ECAM III), our objective is to put on evidence the transition or dynamics in poverty, without establishing a poverty line. Having choosen this scope for investigation, we built up a composite index of poverty, from a set a set of non monetary household’s living conditions indicators, by using the multiple component analysis. And throught out stochastic dominance tests we compare urban poverty profile, rural poverty profile and then the one of the whole country. All these statements are made for the period between 2001 and 2007. The results show that non monetary poverty has decrease between 2001 and 2007 in urban areas and in the whole country only in middle households classes in Cameroon. For the poor and the rich, non monetary poverty has increased in urban area. It is the same situation as far as the whole country is concerned. We also see that rural non monetary poverty increased over this period of time. Then, we can say that non monetary poverty seem to be a rural phenomenon like the monetary poverty. The policy recommendations are declined thus improving accessibility to basic infrastructures, to potable water, to electricity and quality of housing in rural areas, and greater jobs creation in urban areas, where inequalities are most noticeable and increasing.Pauvreté non monétaire, inégalités, dynamique de la pauvreté, pauvreté transitoire, pauvreté chronique, dominance stochastique, analyse factorielle, ACM, COPA, Cameroun

Dynamique de la pauvreté non monétaire au Cameroun entre 2001 et 2007: analyse en correspondances multiples et tests de dominance stochastique

The aim of the present study is to investigate on non monetary poverty in Cameroon, focusing on the dynamic of poverty profiles in urban and rural areas, and all over the whole country between 2001 and 2007.Poverty persistence explains the interest and the stakes of the current study. By using data coming from the last two Cameroonians surveys on households standards livings conducted respectively in 2001 (ECAM II) and in 2007 (ECAM III), our objective is to put on evidence the transition or dynamics in poverty, without establishing a poverty line. Having choosen this scope for investigation, we built up a composite index of poverty, from a set a set of non monetary household’s living conditions indicators, by using the multiple component analysis. And throught out stochastic dominance tests we compare urban poverty profile, rural poverty profile and then the one of the whole country. All these statements are made for the period between 2001 and 2007. The results show that non monetary poverty has decrease between 2001 and 2007 in urban areas and in the whole country only in middle households classes in Cameroon. For the poor and the rich, non monetary poverty has increased in urban area. It is the same situation as far as the whole country is concerned. We also see that rural non monetary poverty increased over this period of time. Then, we can say that non monetary poverty seem to be a rural phenomenon like the monetary poverty. The policy recommendations are declined thus improving accessibility to basic infrastructures, to potable water, to electricity and quality of housing in rural areas, and greater jobs creation in urban areas, where inequalities are most noticeable and increasing

Dynamique de la pauvreté non monétaire au Cameroun entre 2001 et 2007: analyse en correspondances multiples et tests de dominance stochastique

The aim of the present study is to investigate on non monetary poverty in Cameroon, focusing on the dynamic of poverty profiles in urban and rural areas, and all over the whole country between 2001 and 2007.Poverty persistence explains the interest and the stakes of the current study. By using data coming from the last two Cameroonians surveys on households standards livings conducted respectively in 2001 (ECAM II) and in 2007 (ECAM III), our objective is to put on evidence the transition or dynamics in poverty, without establishing a poverty line. Having choosen this scope for investigation, we built up a composite index of poverty, from a set a set of non monetary household’s living conditions indicators, by using the multiple component analysis. And throught out stochastic dominance tests we compare urban poverty profile, rural poverty profile and then the one of the whole country. All these statements are made for the period between 2001 and 2007. The results show that non monetary poverty has decrease between 2001 and 2007 in urban areas and in the whole country only in middle households classes in Cameroon. For the poor and the rich, non monetary poverty has increased in urban area. It is the same situation as far as the whole country is concerned. We also see that rural non monetary poverty increased over this period of time. Then, we can say that non monetary poverty seem to be a rural phenomenon like the monetary poverty. The policy recommendations are declined thus improving accessibility to basic infrastructures, to potable water, to electricity and quality of housing in rural areas, and greater jobs creation in urban areas, where inequalities are most noticeable and increasing

Impacts of the 2014-16 drop in oil prices on child poverty in Chad and options for a policy response: Analysis using a recursive dynamic CGE model with fully integrated microsimulations

In 2003, Chad became a producer and exporter of crude oil. Its annual real GDP growth, negative in 1999 and 2000, became positive again with the beginning of oil related activities and reached a peak of 33.63% in 2004. However, the drastic drop in oil prices of around 80% between June 2014 and January 2016, have heavily impeded growth and poverty alleviation efforts in Chad. This is while, child poverty headcount ratio is already very high and above the national average. This study therefore aims to assess the impacts of this crisis on child monetary poverty, and to explore some policy responses that would specifically reduce poverty amongst children. To this end, a recursive dynamic Computable General Equilibrium model is used, with fully integrated microsimulations. It results from the study that, in the event the crisis had not occurred, the poverty headcount ratio for children would have dropped considerably. With the crisis, for the whole population, additional number of poor reached 1,146,025 individuals in 2018 and increased to 1,506,177 people in 2025: an increase of 23.1% and 28.8%, respectively. The share of children in this additional number is between 55 and 59% throughout the considered period: i.e. 628,427 more poor children in 2018 and 884,528 in 2025. Five response options are simulated: first, the pilot social safety nets implemented in 2018. It consists in allocating cash transfers to some poor households in three regions of the country. The other four options are exploratory policies, including cancellation of tariffs or VAT on food, and two options to broaden the scope of social safety nets to all households housing poor children. It arises from simulations that the latter two options are most effective and efficient for alleviating poverty. The study therefore suggests some modalities to implement such a program

Long Run Vs Short Run Effects of a Value Added Tax: A Computable General Equilibrium Assessment for Cameroon

This paper examines the gap that would exist between short run effects of implementing a value added tax and long run ones. These effects are captured using a CGE model applied to the Cameroon case. The short run is assumed to be a period when only labor is mobile across production sectors while the long run is set as a time horizon at which the capital becomes also mobile. The paper focuses on the analysis of welfare effects and some resource allocation considerations. Results from simulations denote that, even if an imperfect VAT could be welfare improving in the short run, this improvement would tend to turn into welfare deterioration in the long run. On the contrary, if the VAT implemented is a pure one, the transitional welfare improvement of the short run widen in the long run; in the same line of a pure VAT, a short time welfare worsening, if any, tends to disappear or to turn into gains in the long run. To promote a sustainable welfare improvement from VAT implementation, this study then encourages countries, and particularly Cameroon, to gradually liken their VAT to a pure one; without overleaping VAT administration constraints, and some pro-socioeconomic policies which could be taken with the aim to preclude tax regressivity undesirable effects

Impacts of the 2014-16 drop in oil prices on child poverty in Chad and options for a policy response: Analysis using a recursive dynamic CGE model with fully integrated microsimulations

In 2003, Chad became a producer and exporter of crude oil. Its annual real GDP growth, negative in 1999 and 2000, became positive again with the beginning of oil related activities and reached a peak of 33.63% in 2004. However, the drastic drop in oil prices of around 80% between June 2014 and January 2016, have heavily impeded growth and poverty alleviation efforts in Chad. This is while, child poverty headcount ratio is already very high and above the national average. This study therefore aims to assess the impacts of this crisis on child monetary poverty, and to explore some policy responses that would specifically reduce poverty amongst children. To this end, a recursive dynamic Computable General Equilibrium model is used, with fully integrated microsimulations. It results from the study that, in the event the crisis had not occurred, the poverty headcount ratio for children would have dropped considerably. With the crisis, for the whole population, additional number of poor reached 1,146,025 individuals in 2018 and increased to 1,506,177 people in 2025: an increase of 23.1% and 28.8%, respectively. The share of children in this additional number is between 55 and 59% throughout the considered period: i.e. 628,427 more poor children in 2018 and 884,528 in 2025. Five response options are simulated: first, the pilot social safety nets implemented in 2018. It consists in allocating cash transfers to some poor households in three regions of the country. The other four options are exploratory policies, including cancellation of tariffs or VAT on food, and two options to broaden the scope of social safety nets to all households housing poor children. It arises from simulations that the latter two options are most effective and efficient for alleviating poverty. The study therefore suggests some modalities to implement such a program