Analysis Of Economic Growth Income Distribution And Poverty In Ethiopia Using Cge Model

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This paper presents the nature of the links between economic growth, poverty and incomerndistribution, a central question to the study of economic development. The model adapted wasrnthe simple non-dynamic Computable General Equilibrium (CGE) model developed byrnInternational Food Policy Research Institute (IFPRI) and those used by Cogneau andrnRobilliard. CGE model takes into account market interaction, that is, the effects of pricingrnoutcomes of one market in other markets, and its effects, in turn, creating ripples throughoutrnthe whole economy, perhaps even to the extent of affecting the price-quantity equilibrium inrnthe original market. The underlying Social Accounting Matrix (SAM), which provides initialrnvalues for variables and parameters in the model, is taken from Alemayehu and Tadeles’rn1999 SAM. Given the limitations of CGE models, econometric estimations is carried out tornhandle the households agricultural production function using the Ethiopian Rural HouseholdrnSurvey (ERHS). To explore the impact of an increasing agricultural productivity on povertyrnand inequality, simulation exercises are performed. Then, the mean income elasticity of thernFoster-Greer-Thorbeck (FGT) poverty indices are estimated to examine its poverty impact.rnInequality effects are explored by estimating Gini index for rural and urban households byrnusing the Generalized Quadratic (GQ) Lorenz curve. rnKey words: computable general equilibrium (CGE), growth, poverty, inequality

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Analysis Of Economic Growth Income Distribution And Poverty In Ethiopia Using Cge Model

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