Decomposing the Effects of Economic Policies on Poverty Trends in Cameroon: A Double Calibration Micro Simulated General Equilibrium Analysis
Poverty and Economic Policy Research Network Working Paper No. MPIA-2008-18
57 Pages Posted: 26 Feb 2009 Last revised: 31 Aug 2014
Date Written: November 26, 2008
This paper aims to bring out the determinants of 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 in this study. Findings obtained reveal that the devaluation, the rehabilitation of infrastructures, and the VAT enforcement respectively accounted for two percent, nine percent and -4 percent of 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). Aside from revealing the intrinsic impacts of the aforementioned policies, the double calibration approach made it possible to realize that technological changes that 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 that occurred across time in the values of scale parameters contained in production and product differentiation functions.
Keywords: Double calibration, Impacts decomposition, Micro simulation, Devaluation, CGE models, Technological changes, Tax and Customs reforms, Basic infrastructure
JEL Classification: C68, D58, H22, H54, I32
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