The distributional impact of macroeconomic shocks in Mexico: threshold effects in a multi-region CGE model

This paper presents a regionally disaggregated computable general equilibrium (CGE) model of Mexico in order to examine the differential effects of external shocks across the regions. The model demonstrates how the internal migration regime is affected by exogenous changes in the presence of threshold effects, in which an exogenous change may not effect regional behavior until the shocks are large enough to overcome the isolation of local markets. The results show that migration helps mitigate the income changes caused by the simulations.Equilibrium (Economics) Econometric models., Equilibrium (Economics) Simulation methods., Migration, Internal.,

A computable general equilibrium analysis of Mexico's agricultural policy reforms

Since the late 1980s, Mexico has liberalized its agricultural sector, moving from a system of price supports, producer subsidies and consumer subsidies to a less distorting scheme in which market forces play a greater role. Coinciding with these agrarian and food policy reforms, the government has implemented the PROCAMPO system of direct payments to farmers. There is a general consensus that a direct payment program has the potential to be more efficient than a system of subsidies and supports. At the same time, there is widespread agreement that other policies need to be put in place to assure protection of the economically vulnerable segments of the population. Within this context, this paper uses a computable general equilibrium (CGE) model to analyze the regional, household and economy-wide effects of switching from the old system of price supports and subsidies to the new system of PROCAMPO payments. A CGE model of Mexico is constructed with four rural regions and one urban region and a high disaggregation of the agricultural and food sectors. It also includes 15 households, defined according to region and income level to permit a rich analysis of distribution effects. The initial experiment consists of removing the PROCAMPO payments from the base year (1996) and adding back the subsidy and support scheme as it existed in 1993, the year before PROCAMPO began. Then two policies are tested under an exchange rate depreciation to see how each policy regime reacts to adverse shocks. The simulations demonstrate that in a static situation, lump sum payments are preferred to the system of subsidies and price supports. In the event of a negative external shock, the simulations suggest that the old system performs better in terms of output and rural incomes. However, urban households are worse off, and their size in total population may make this an unattractive policy.

Economy-wide effects of El Niño / Southern Oscillation (ENSO) in Mexico and the role of improved forecasting and technological change

Weather fluctuations, such as those caused by the El Niño Southern Oscillation (ENSO), add to the riskiness associated with agricultural production. Improved predictive capacity may help ameliorate negative impacts of climate and weather shocks on agriculture, but it is possible that the benefits of an improved forecast will be distributed unevenly. In particular, poor farmers may not have access to improved forecasts, or they may not have the means to adapt to new weather information. This paper uses a stochastic computable general equilibrium (CGE) model to examine the distributive effects of improved forecasting of ENSO in Mexico. The particular focus is on agriculture, one of the most vulnerable sectors in the face of ENSO, as well as a sector which provides income to many of the country's poorest households. The model is used to investigate the responsiveness of various sectors of the economy under different degrees of improved predictive capacity and improvements in agricultural technology....The results show that while agricultural losses are small as a share of the overall economy, improved forecasting techniques can eliminate these lossesStochastic analysis ,Agriculture Environmental aspects Mexico ,Climatic changes Models ,Agricultural productivity ,Forecasting ,TMD ,

Evaluating targeted cash transfer programs: a general equilibrium framework with an application to Mexico

This report focuses on the indirect and direct effects of transfer programs. In particular, it shows how modelling results can be combined with information from standard household surveys to provide an integrated analysis of the direct distributional impact of such programs and the indirect distributional and efficiency impacts arising from domestic financing mechanisms. This approach reflects the view that any credible poverty alleviation strategy must have a credible financing strategy underlying it, and this need for domestic financing can have important consequences for both the level and the distribution of household incomes. To illustrate the approach, the report focuses on the recent introduction in Mexico of an innovative poverty alleviation transfer program called PROGRESA, which has been used as a prototype for similar programs that have recently been implemented in other developing countries.Economic assistance, Domestic Mexico Evaluation, Public welfare - Mexico Evaluation,

Evaluating transfer programs within a general equilibrium framework

The authors set out a general equilibrium model for the evaluation of a domestically financed transfer program, which helps to combine the results from a computable general equilibrium model with disaggregated household data.Using a Mexican cash transfer program as an illustration, they use the approach to show that the substantial welfare gains that result from the switch from universal food subsidies to targeted cash transfers reflect both the improved targeting efficiency of the latter as well as a relaxation of the trade-off between equity and efficiency objectives when designing tax systems.Subsidies Mexico. ,Transfer payments. ,Equilibrium (Economics) Models. ,

Evaluating transfer programs within a general equilibrium framework

The authors set out a general equilibrium model for the evaluation of a domestically financed transfer program, which helps to combine the results from a computable general equilibrium model with disaggregated household data.Using a Mexican cash transfer program as an illustration, they use the approach to show that the substantial welfare gains that result from the switch from universal food subsidies to targeted cash transfers reflect both the improved targeting efficiency of the latter as well as a relaxation of the trade-off between equity and efficiency objectives when designing tax systems.FCND ,Subsidies Mexico. ,Transfer payments. ,Equilibrium (Economics) Models. ,

A regional general equilibrium analysis of the welfare impact of cash transfers

Using a regionally disaggregated computable general equilibrium model, we analyze the differential welfare impacts of a cash transfer program targeted at rural areas. The direct effect of the transfers decreases regional income differentials, but the indirect effects depend on how the program is financed. Financing the program with a more efficient tax system is also less regressive and has favorable urban impacts. The less efficient instruments result in relatively higher incomes in all rural regions, but are more regressive. The increasing share of urban poverty highlights the shortcomings of rural targeting and raises the issue of horizontal equity.Welfare economics. ,Rural population. ,Econometric models. ,TMD ,

A standard computable general equilibrium (CGE) model in GAMS

Computable general equilibrium (CGE) models are used widely in policy analysis. The purpose of this paper is to contribute to and facilitate the use of CGE models. The paper includes a detailed presentation of a “standard” CGE model (an equation-by-equation description) and its required database. It incorporates features developed in recent years in research projects conducted at IFPRI. These features, which are of particular importance in developing countries, include household consumption of non-marketed (or “home”) commodities, explicit treatment of transaction costs for commodities that enter the market sphere, and a separation between producing activities and commodities that permits any activity to produce multiple commodities and any commodity to be produced by multiple activities. The paper discusses the implementation of the model in GAMS (the General Algebraic Modeling System) and is accompanied by a self-extracting zip file, which includes the GAMS files for the model, sample databases, simulations, solution reports, and a SAM aggregation program. Although the paper provides a standardized framework for analysis, the analyst is not forced to make “one-size-fits-all” assumptions. The GAMS code is written in a manner that gives the analyst considerable flexibility in model specification.Household consumption ,economic policies ,mathematical models ,TMD ,

Estimating income mobility in Colombia using maximum entropy econometrics.:

Income mobility can be viewed as a first-order Markov process, with a matrix of transition probabilities which measure how individuals move from an income status in time t to a new status in time t+1. Direct estimation of transition matrices is difficult, since time series panel data are unavailable and limited data on the distribution of income do not suffice to determine the coefficients mathematically, let alone provide enough degrees of freedom for estimation. In this paper, we show that maximum entropy econometrics offers a feasible way to estimate transition matrices using distributional data from Colombia. Using a cross-entropy estimation method, we make efficient use of prior information about the structure of the transition matrices and how they vary with age. The approach is very flexible, allowing the use of “information” in a variety of forms such as inequality constraints, errors in measurement, and prior estimates. Under weak assumptions about the error generation process, we can derive test statistics based on the likelihood ratio measuring the significance of the estimation. The model fits the data well in that the predicted and actual distributions for period t+1 are close. The results show that there is a large degree of upward mobility in Colombia, especially at the bottom of the income distribution and for the younger age cohorts.Income distribution, Econometric models., Colombia. ,

Glucocorticoid Receptor and Adipocyte Biology.

Glucocorticoids are steroid hormones that play a key role in metabolic adaptations during stress, such as fasting and starvation, in order to maintain plasma glucose levels. Excess and chronic glucocorticoid exposure, however, causes metabolic syndrome including insulin resistance, dyslipidemia, and hyperglycemia. Studies in animal models of metabolic disorders frequently demonstrate that suppressing glucocorticoid signaling improves insulin sensitivity and metabolic profiles. Glucocorticoids convey their signals through an intracellular glucocorticoid receptor (GR), which is a transcriptional regulator. The adipocyte is one cell type that contributes to whole body metabolic homeostasis under the influence of GR. Glucocorticoids' functions on adipose tissues are complex. Depending on various physiological or pathophysiological states as well as distinct fat depots, glucocorticoids can either increase or decrease lipid storage in adipose tissues. In rodents, glucocorticoids have been shown to reduce the thermogenic activity of brown adipocytes. However, in human acute glucocorticoid exposure, glucocorticoids act to promote thermogenesis. In this article, we will review the recent studies on the mechanisms underlying the complex metabolic functions of GR in adipocytes. These include studies of the metabolic outcomes of adipocyte specific GR knockout mice and identification of novel GR primary target genes that mediate glucocorticoid action in adipocytes