Economic growth and income distribution: linking macro-economic models with household survey data at the global level

Abstract

This paper describes in detail the analytical structure of the Global Income Distribution Dynamics (GIDD) model, a global macro-micro modelling framework, and provides some examples of its recent applications. GIDD is the first macro-micro global simulation model focused on long-term, global growth and distribution dynamics. GIDD has been applied in analyzing the effects of multilateral trade liberalization or mitigation of climate change damages, among others. It also explicitly considers long term time horizons during which changes in the demographic structure are crucial components of both growth and distribution dynamics. The challenges of assessing plausible worldwide distributional implications of growth, large shocks, and policy changes are daunting. Although addressing these issues in a macro-micro framework is subject to great uncertainty, a clearly superior alternative is not yet available.global income distribution; macro-micro model