Poverty Analysis Within a General Equilibrium Framework

The main objective of this paper is to show how Social Accounting Matrices (SAM) and Computable General Equilibrium (CGE) Models can be used to highlight and address issues related to income distribution and poverty. The paper is divided into two major parts. Part 1 presents the concept of the SAM as a comprehensive, consistent and disaggregated data system and shows how the SAM methodology can be used to analyze issues related to income distribution and, in a much more limited way, poverty. Part 2 is devoted to the presentation of a CGE model calibrated on an archetype African SAM (same as above). One innovation in the specification of the present CGE is that it goes part way in endogenizing the poverty line and the resulting poverty incidence among the different socioeconomic household groups and representing income distribution with a flexible Beta distribution function and using the F-G-T additively decomposable class of poverty measures. The model is used to simulate the impact of two exogenous shocks (a fall in the price of the export crop and an import tariff reform) specifically on poverty.