A regional computable general equilibrium model for Guatemala: Modeling exogenous shocks and policy alternatives

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cg.coverage.countryGuatemala
cg.coverage.iso3166-alpha2GT
cg.coverage.regionLatin America
cg.coverage.regionCentral America
cg.creator.identifierSamuel Morley: 0000-0003-3047-8112
cg.creator.identifierValeria Piñeiro: 0000-0002-4372-7141
cg.identifier.projectIFPRI - Markets, Trade, and Institutions Division
cg.identifier.publicationRankNot ranked
cg.number1137en
cg.placeWashington, DCen
cg.reviewStatusInternal Reviewen
dc.contributor.authorMorley, Samuelen
dc.contributor.authorPiñeiro, Valeriaen
dc.date.accessioned2024-10-01T14:00:36Zen
dc.date.available2024-10-01T14:00:36Zen
dc.identifier.urihttps://hdl.handle.net/10568/154282
dc.titleA regional computable general equilibrium model for Guatemala: Modeling exogenous shocks and policy alternativesen
dcterms.abstractIn this paper we develop a dynamic regional computable general equilibrium (CGE) model for Guatemala that incorporates regional disaggregated sectors for agriculture. The model is designed to be useful as a development tool for determining the effects of regional investments intended to reduce regional poverty and also to explore policy options to deal with a number of macro and balance-of-payments issues. Our model extends previous modeling work on Guatemala in several ways. First, it develops an updated regional social accounting matrix (SAM) for 2008, coupled with an updated CGE. Second, the CGE is a recursive dynamic model that incorporates unemployment in the short run. Most CGE models are not useful for short-run analysis because they are comparative static models that assume full employment. We specify a fixed minimum wage and an informal sector and use a recursive dynamic framework to solve for the short-run adjustment process that occurs as the economy responds to shocks. Second, the model is regional, permitting us to examine the impact of sectoral development policies, particularly those focused on agriculture. Guatemala has one of the lowest investment rates in Latin America. We show that if the investment share is raised by 4percent over five years, the rate of growth of the economy rises by about .6 percentage points. Guatemala is also quite sensitive to external macro disturbances. Our dynamic model gives a first approximation of the timing and nature of the adjustment over the ten years following various macro disturbances. We show that after ten years most of these shocks are absorbed by changes in the real exchange rate and the composition of output rather than the rate of growth of output. Negative shocks cause a real devaluation and a shift from consumption and non-tradables and towards exports and tradable goods. An important empirical question is whether the adjustment toward the traded goods sector is as flexible as the underlying elasticities in the model imply.en
dcterms.accessRightsOpen Access
dcterms.bibliographicCitationMorley, Samuel; Piñeiro, Valeria. 2011. A regional computable general equilibrium model for Guatemala: Modeling exogenous shocks and policy alternatives. IFPRI Discussion Paper 1137. https://hdl.handle.net/10568/154282en
dcterms.extent33 pagesen
dcterms.isPartOfIFPRI Discussion Paperen
dcterms.issued2011
dcterms.languageen
dcterms.publisherInternational Food Policy Research Instituteen
dcterms.relationhttps://hdl.handle.net/10568/153058en
dcterms.relationhttps://hdl.handle.net/10568/154302en
dcterms.replaceshttps://ebrary.ifpri.org/digital/collection/p15738coll2/id/126745en
dcterms.subjecteconomic developmenten
dcterms.subjectgross national producten
dcterms.subjectinvestmenten
dcterms.subjectincomeen
dcterms.subjectexportsen
dcterms.subjectagricultureen
dcterms.subjectanalysisen
dcterms.subjectsocial analysisen
dcterms.subjectcomputable general equilibrium modelsen
dcterms.subjectshocken
dcterms.typeWorking Paper

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