A CGE Modelling Approach
The effect of trade liberalization on poverty income inequality and the overall economy is a timely issue that requires meticulous assessment in Ethiopia where there are production and consumption heterogeneities. The book, relying on the 2004/05 EHCES data, examines the economic behavior of households using Quadratic Almost Ideal Demand(QUAIDS) and further reclassifies the household account of the 2005 Social Accounting Matric (SAM) of Ethiopia based on their consumption pattern. The book incorporates possible way of new SAM balancing techniques which could be used in a situation where both balanced and unbalanced accounts co-existed in a single SAM. Using the STAGE Computational General Equilibrium (CGE) models, the book examines the possible impact of trade liberalization in Ethiopia on poverty, the production of priority industries, welfare and income inequality both in short and long run. The book also examines the inter-sectoral linkages among activities and enables to sort out both key and weakly linked sectors of the economy using a SAM multiplier analysis. Moreover, the book proposes a new method of dealing with intra group distribution of income using linear combination and arithmetic progression techniques such that the likely impact of trade liberalization on poverty and income inequity is examined accordingly. The impact of consumption switching during trade liberalization on poverty has been explicated. Based on the aforementioned empirical evidences, the book suggests the way that enable Ethiopia accrues benefits from trade liberalization and further indicates possibilities of reaping benefits from resource reallocation within the industrial sectors in the country.
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Farming and Rural Systems Economics, Vol. 155ISSN 1616-98082015; XIV+182; 21 x 14,8 cm; paper
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