A computable general equilibrium model to analyze distributive aspects in Brazil with a trade policy illustration

Abstract

This paper presents a Computable General Equilibrium model specified to simulate the policy impacts on income distribution in Brazil, with complex and systemic propagation methods. To capture the distributive impacts, the model adopts a design focused on the separation of production and institutional factors, as labor and households. The model has three blocks: product and factor markets, and a block that handles with income transfers among institutions. The labor market specification incorporates a recent theoretical advance that allows the determination of involuntary unemployment in the equilibrium. The third block specifies the distribution of the value added among production factors and the redistribution of income among agents/institutions. The simulations of a partial economic "closure" show modest welfare reduction for most workers and families. Also, we checked that the homogeneity property of the model holds only with full indexation of all income transfers, which has important implications for the income distribution process modeling.<br>Neste artigo é apresentado um modelo de Equilíbrio Geral Computável especificado para simular os impactos de políticas na distribuição de renda no Brasil. Para capturar os impactos distributivos, fatores de produção e instituições, como trabalho e famílias, são especificados separadamente. O modelo apresenta três blocos: mercados de produtos e fatores, e outro bloco com especificação das transferências de renda entre instituições. A especificação do mercado de trabalho incorpora recente avanço teórico que permite a determinação do desemprego involuntário no equilíbrio. No terceiro bloco, especifica-se a distribuição do valor adicionado entre fatores de produção e a redistribuição de renda entre agentes/instituições. As simulações do fechamento "parcial" da economia mostram pequena redução de bem-estar para a maioria dos trabalhadores e famílias. Verificou-se ainda que a homogeneidade do modelo vale somente com plena indexação de todos os fluxos de renda, o que tem importantes conseqüências sobre a modelagem do processo de distribuição de renda

Cash Transfer Policies, Taxation and the Fall in Inequality in Brazil An Integrated Microsimulation-CGE Analysis

“…The full description and data for these programs are presented in Cury et al (2010, Appendix D). The CGE model used in this research is an extension of the one presented by Cury et al (2005), where further details can be found, and is a result of a series of developments made in the model proposed by Devarajan et al (1991), as can be seen in Cury (1998), Barros et al (2000) and Coelho et al (2003).…”

From revenue to value added taxes: welfare and fiscal efficiency effects in Brazil

“…The CGE model used here is an extension from the one presented by Cury et al (2005) 15 where further details can be found.…”

“…29 A brief description of wage curves can be found in Cury et al (2005). Broader explanation about them can be found in Oswald (1990, 1994 …”

Effects of Alternative Policies on Income Redistribution: Evidence from Brazil

“…Regarding their application, CGE models have been used by diverse authors for different purposes. Among those who utilise the CGE model for the analysis of income redistribution are the works of Cury et al (2003), Kim and Kim (2002), Bye and Avitsland (2002) and Güzel and Kulshrestha (1995).…”