Shocks, Policy Reforms and Pro-Poor Growth in Bolivia: A Simulation Analysis

20 Pages Posted: 13 Jan 2008

See all articles by Jann Lay

Jann Lay

GIGA German Institute of Global and Area Studies; University of Goettingen

Rainer Thiele

Kiel Institute for the World Economy

Manfred Wiebelt

University of Kiel - Institute for World Economics (IfW)

Abstract

This paper analyzes how major external shocks and policy reforms affect Bolivias ability to achieve pro-poor growth. Employing a recursive-dynamic CGE model, it considers three different scenarios: an optimistic baseline scenario; a more realistic scenario that accounts for two important negative external shocks (declining capital inflows and El Niño); and a scenario that captures the combined effect of the shocks and two major reform projects (development of the gas sector and deregulation of the urban labor market). It turns out that the shocks are likely to impair Bolivias medium-term development prospects, leading to marked increases in both urban and rural poverty. If the reform projects were implemented, the poverty increase caused by the shocks would be more than offset for urban households, but reinforced for rural households.

Suggested Citation

Lay, Jann and Thiele, Rainer and Wiebelt, Manfred, Shocks, Policy Reforms and Pro-Poor Growth in Bolivia: A Simulation Analysis. Review of Development Economics, Vol. 12, No. 1, pp. 37-56, February 2008. Available at SSRN: https://ssrn.com/abstract=1083214 or http://dx.doi.org/10.1111/j.1467-9361.2007.00394.x

Jann Lay (Contact Author)

GIGA German Institute of Global and Area Studies ( email )

Neuer Jungfernstieg 21
Hamburg, DE D-20354
Germany

University of Goettingen

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Rainer Thiele

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany
+49 431 8814 215 (Phone)
+49 431 8814 500 (Fax)

Manfred Wiebelt

University of Kiel - Institute for World Economics (IfW) ( email )

Duesternbrooker Weg 120
D-24118 Kiel
Germany

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