New Working Paper: Using CGE and Microsimulation Models for Income Distribution Analysis: A Survey

This paper carries out a detailed survey of CGE and Microsimulation models used in the evaluation of issues related directly or indirectly to incomes distribution. Different model structures are discussed which have been employed for country-specific, multi-country and region-specific studies. The paper considers the relevance of a relatively recent approach in modeling_linking CGE frameworks with microsimulation models, for the income distribution and poverty analysis. Finally we discuss the practical application of this methodology along with a detailed picture of some active CGE-microsimulation models. http://www.economics.nuig.ie/resrch/pdf/paper_0089.pdf

Regional economic modelling: evaluating existing methods and models for constructing an Irish prototype

This paper provides an overview of competing and supplementing methodologies for modelling the regional economic dynamics. The discussion provides a primer on how regional CGE, Econometric, Input-Output and SAM based models work towards capturing the region-specific, interregional and multiregional production, consumption and factor market patterns. An analysis of virtues and limitations of these alternate methodologies suggests that it may be the considerations such as the data collection/compilation, expected output, research objectives and costs involved that may determine the choice of modelling framework. Several existing regional models constructed for other countries and their characteristics are summarized along with the specific discussion on regional economic impact analysis in Ireland and how one could move towards constructing an Irish prototype.Input Output; Social Accounting Matrix; Computable General Equilibrium (CGE) Model;

External scale economies in manufacturing sector of Pakistan: a comparison of large scale manufacturing sector of Sindh and Punjab

This study investigates the external economies of scale in the manufacturing sector of Pakistan. The Return to scale is a property of the production function that indicates the relationship between proportionate change, in all inputs and resulting change in output. Returns to scale are applicable only in the long run, since all inputs are being changed. The estimated value of the coefficient of returns to scale at aggregate level is 1.017. It means that one percentage point change in all input quantities results in 1.017 percent change in output. It turns out that manufacturing sector of Pakistan is characterized by almost constant returns to scale at aggregates and disaggregate level.Economies of Scale; Distortion; Efficiency; Pakistan;

Case Study: Global economic crisis and poverty in Pakistan

In this case study we adopt a macro-micro framework in order to evaluate the impact of the current global crisis on the Pakistan economy. We use a ‘top-down’ approach to combine a static computable general equilibrium model with a microsimulation model. Our results suggest that between 2007 and 2009 the poverty headcount ratio is likely to have increased by almost 80 percent, from 22 to 40 percentage points. However, our results also show that this increase is attributable in part to the fuel and food crisis that preceded the financial crisis. Our results also indicate a differential impact, with wage increases for farm workers and a decrease in wages for skilled labour.CGE; micro-macro; global economic crisis; Pakistan

Rethinking connectivity as interactivity: a case study of Pakistan

Connectivity in developing countries has traditionally been viewed in terms of investment in transport and communications. This papers makes an effort to go beyond this traditional view and conceptualizes connectivity as networks between people and places. We split the overall national reforms agenda for connectivity into three prongs: a) transportation and related services, b) ICT, and c) social capital. We try to see the state of each of these three in case of Pakistan and then propose reforms keeping in view the current political economy milieu.Connectivity; Economic Growth; Transport; Communications; Social Capital

Development Paradox in Pakistan

Pakistan has been experiencing robust economic growth for the past few years. The macroeconomic position as exhibited by the real sector growth, fiscal indicators and external balance has reasonably improved. However the big question remains; will Pakistan be able to sustain these growth levels? Preserving the momentum becomes difficult when growth is consumption-based. Prosperity if measured by the increased sale of consumer durables gives a partial impression of the underlying economic changes. Promoting luxuries at the opportunity cost of necessities does not promote a pro-savings attitude at the national level and has deeper sociological consequences as well. Pakistan being a small open economy has limited or no control over the consumer or producer price levels. The vulnerability of the economy is again being tested in the face of global energy price increases and food shortages. We try to revisit the stop-go cycle of economic growth in Pakistan, the missing link between sources of growth and meso-micro level development and the knee-jerk reaction type(s) that we adopt as an answer to every economic crises.Pakistan, Poverty, Development, Inequality, Trade, Production, Taxation, Consumption, Investment

Foreign assistance and economic growth: evidence from Pakistan 1972 - 2010

This paper examines the relationship between foreign assistance and economic growth for the period 1972 to 2010. Past literature indicates that due to low domestic resource mobilization Pakistan had to resort to various forms of foreign assistance on a regular basis. Using time series data since 1972 and employing Johansen maximum likelihood procedure we show that foreign assistance in the absence of macroeconomic stabilization and structural reforms has a negative relationship with real per capita GDP. However national savings as percentage of GDP show a positive relationship with real per capita GDP. Pakistan has a long history of dependence on multilateral and bilateral development partners. Over the decades the share of grants as percentage of total foreign assistance has declined forcing the country to procure loans at harsh conditionalties. Given the positive impact of national savings on economic growth there is an urgent need for improving the tax base, promoting instruments that encourage savings culture in the private sector and attracting remittances from abroad. These increased savings would then have to be channelized towards productive investments which in turn require pro market reforms.Foreign assistance, Economic Growth, National Savings

Welfare impact of external balance in pakistan: CGE-microsimulation analysis

This paper studies the welfare impact of changes in the external balance of a developing economy (Pakistan). We explain that the economic growth achieved during the past decade is highly dependent on the improvements in external balance. After 2001, Pakistan has benefited from, an increase in the inflow of remittances, foreign assistance from bilateral and multilateral sources, and a relatively stable exchange rate. This was complimented by growth in the real sector. The GDP grew at an average of 7 percent from 2002 to 2007. During the same time period the growth in per-capita income was around 13 percent in dollar terms. This performance however has come under pressure due to the rising inflation, slowing down of global economy and external price shocks. The increase in import price of petroleum, raw materials and other manufactured goods has the potential of reducing the growth performance, impacting the competitiveness of the economy and thereby threatening the gains achieved during the past seven years in reducing the poverty levels. We study using a CGE-microsimulation model the effects of changes in import prices faced by Pakistan. Also provided in the simulation exercise is an analysis of increase in foreign savings that are usually prescribed for developing economies in order to augment the domestic savings and channelling investment towards developments in infrastructure and social sectors.Computable General Equilibrium Model; Microsimulation; Balance of Payments; Economic Growth; Poverty; Inequality; Pakistan

CGE-Microsimulation Modelling: A Survey

This paper reviews the recent work on the application of the CGE-microsimulation models. The discussion focuses on the various linking methodologies and how they can impact our results.Computable General Equilibrium (CGE) Model; Microsimulation; Poverty; Inequality;

Effectiveness of HRD for developing SMEs in South Asia

Today South Asia is host to a large youth bulge which is entering the labor market every year posing challenging questions for the national governments in the context of employable skills, space for entrepreneurship, innovation and economic freedom. SME sector provides an opportunity for the young to exercise their ideas and ideals. However a prerequisite for the young to be innovate is the how countries produce and retain a high end human capital. This study provides a review of national socio-economic policies in South Asian region - which answer such challenges.human resource development, small and medium enterprises, economic growth, competitiveness