The Poverty and Distributional Impact of Macroeconomic Shocks and Policies: A Review of Modeling Approaches

78 Pages Posted: 28 Sep 2005

Date Written: August 2005

Abstract

The importance of distributional issues in policy making creates a need for empirical tools to assess the social impact of economic shocks and policies. This paper reviews some of the modeling approaches that are currently in use at the World Bank and other international financial institutions. The specification of these models is dictated by the issues at stake, the knowledge about the nature of the process involved, and the availability and reliability of relevant data. Furthermore, shocks and policies have macroeconomic, structural, and distributional implications. This creates interdependence between such policy issues. Finally, the distributional impact of shocks and policies hinges on the heterogeneity of socioeconomic agents with respect to endowments and behavior. In the end, each modeling approach should be judged on how well it handles the interdependence between policy issues and the heterogeneity of the stakeholders, given other constraints.

Suggested Citation

Essama-Nssah, B., The Poverty and Distributional Impact of Macroeconomic Shocks and Policies: A Review of Modeling Approaches (August 2005). World Bank Policy Research Working Paper No. 3682, Available at SSRN: https://ssrn.com/abstract=786528

B. Essama-Nssah (Contact Author)

World Bank ( email )

Washington, DC 20433
United States

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