Integrating livestock in the CAADP framework: Policy analysis using a dynamic computable general equilibrium model for Ethiopia

Gelan, Ayele; Engida, Ermias; Caria, A. Stefano; Karugia, Joseph T. 2012. Integrating livestock in the CAADP framework: Policy analysis using a dynamic computable general equilibrium model for Ethiopia. https://hdl.handle.net/10568/153819

Researchers and policymakers increasingly recognize that the livestock sector supports the livelihoods of a large proportion of rural households in Africa and may have an important role to play in rural poverty reduction strategies. In order to develop this insight, economywide models should capture both the biological, dynamic relationships between the stocks and flows of livestock and the economic linkages between the sector and the rest of the economy. We extend an existing dynamic recursive general equilibrium model for the Ethiopian economy to better model the livestock sector. A separate herd dynamics module enables us to specify stock–flow relationship, distinguishing between the capital role of livestock and the flow of livestock products. We also improve the underlying system of economic accounts to better capture draft power and breeding stocks. We use this model to simulate separate, realistic Total Factor Productivity (TFP) shocks to three agricultural subsectors—cereals, cash crops, and livestock—and compare them with a baseline scenario replicating Ethiopia’s 1998 to 2007 productivity trends. In doing so, we follow Dorosh and Thurlow (2009) who have examined CAADP productivity scenarios.