Publication: A Poverty Analysis Macroeconomic Simulator (PAMS) Linking Household Surveys with Macro-Models
Date
2002-09
ISSN
Published
2002-09
Author(s)
Abstract
The Poverty Analysis Macroeconomic
Simulator (PAMS) is a model that links standard household
surveys with macro frameworks. It allows users to assess the
effect of macroeconomic policies-in particular, those
associated with Poverty Reduction Strategies papers-on
sectoral employment and income, the incidence of poverty,
and income distribution. PAMS (in Excel) has three
interconnected components: (1) A standard aggregate
macro-framework that can be taken from any macro-consistency
model (for example, RMSM-X, 123) to project GDP, national
accounts, the national budget, the BoP, price levels, and so
on, in aggregate consistent accounts. (2) A labor market model
breaking down labor categories by skill level and economic
sectors whose production total is consistent with that of
the macro framework. Individuals from the household surveys
are grouped in representative groups of households defined
by the labor category of the head of the household. For each
labor category, labor demand depends on sectoral output and
real wages. Wage income levels by economic sector and labor
category can thus be determined. In addition, different
income tax rates and different levels of budgetary transfers
across labor categories can be added to wage income. (3) A
model that uses the labor model results for each labor
category to simulate the income growth for each individual
inside its own group, assumed to be the average of its
group. After projecting individual incomes, PAMS
calculates the incidence of poverty and the inter-group
inequality. PAMS can produce historical or counterfactual
simulations of: + Alternative growth scenarios with
different assumptions for inflation, fiscal, and current
account balances. These simulations allow test tradeoffs
within a macro stabilization program. + Different
combinations of sectoral growth (agricultural or industrial,
tradable or non-tradable goods sectors), within a given
aggregate GDP growth rate. + Tax and budgetary transfer
policies. For example, PAMS will simulate a baseline
macro-scenario for Burkina Faso corresponding to an existing
IMF/World Bank-supported program and introduce changes in
tax, fiscal, and sectoral growth policies to reduce poverty
and inequality more effectively than the base scenario. So,
the authors argue that there are several possible
"equilibria" in terms of poverty and inequality
within the same macro framework.
Link to Data Set
Citation
“Pereira da Silva, Luiz A.; Essama-Nssah, B.; Samake, Issouf. 2002. A Poverty Analysis Macroeconomic Simulator (PAMS) Linking Household Surveys with Macro-Models. Policy Research Working Paper;No. 2888. © World Bank, Washington, DC. http://hdl.handle.net/10986/19273 License: CC BY 3.0 IGO.”
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