Distributional effects of adjustment policies: Simulations for archetype economies in Africa and latin America

Françcois Bourguignon, Jaime De Melo, Akiko Suwa

Research output: Contribution to journalArticlepeer-review

Abstract

For developing countries the 1980s was a decade of external shocks whose adverse effects were compounded by domestic macroeconomic imbalances and structural inefficiencies. The performance of developing countries during this decade, however, was not uniform. The effects of terms of trade and interest rate shocks are simulated for two model economies, one representing an average Latin American economy and the other representing an average African economy. In addition to the effects of the shocks, the effects of different adjustment policies are examined. As expected, identical shocks and adjustment packages yield different outcomes for growth, poverty, and income distribution in the two economies. The differences in results can be traced to specific features of the models, and, to the extent that the archetypes created are representative of real economies, have implications for adjustment policy prescriptions.

Original languageEnglish (US)
Pages (from-to)339-366
Number of pages28
JournalWorld Bank Economic Review
Volume5
Issue number2
DOIs
StatePublished - May 1991

ASJC Scopus subject areas

  • Accounting
  • Development
  • Finance
  • Economics and Econometrics

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