A macroeconometric model of a developing economy

Kannapiran, Chinna A.

doi:10.1080/1354786032000045237

Cited by 6 publications

(4 citation statements)

References 18 publications

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“…The consistent economic issues in developing regions, like the budget deficit, stagflation, trade, and heavy indebtedness, enhance the need for developing countries to utilize macro models. Kannapiran (2003) established a macro-econometric model referring to Mundell Fleming and IS-LM for developing nations. Quarterly data was analyzed, with SEM (simultaneous equation model) and error corrections estimated through the 2SLS-core technique.…”

Section: Literature Reviewmentioning

confidence: 99%

Targeting Debt in Pakistan: A Structural Macro-Econometric Model

Fatemah,

Haq

2024

iRASD J. Eco.

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Unsustainable debt levels pose serious economic risks, potentially leading to financial instability when repayments become challenging. This paper investigates the intricate dynamics of Pakistan's debt. It aims to assess its sustainability within a broader eclectic and dynamic framework of responsible fiscal management using macro-econometric analysis. A structural macro-econometric model (MEM) based on five blocks has been developed, i.e., Government, Price, Real, Monetary, and External sectors. Moreover, it comprises sixteen behavioral equations along with ten identities. The Generalized Method of Moments (GMM) has been used to estimate the system of behavioral equations and identities to solve the endogeneity problem, while the Guass-Seidel algorithm is used for model simulation purposes, including dynamic & stochastic simulations. Forecasting has been done from 2023 – 2030. Moreover, three main policy variables, i.e., inflation, exchange rate, and government expenditures, have been given shocks to evaluate their impact on future external borrowing, interest payments along with imports, exports, and net foreign and domestic assets. The results revealed that an effective monetary & fiscal policy must be designed to stabilize the economic conditions to manage external debt and repayments effectively. Moreover, to cope with unsustainable debt conditions, it is required to follow strict fiscal discipline via designing & adhering to a budget that prioritizes inflationary controls and responsible spending practices.

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Section: Literature Reviewmentioning

confidence: 99%

Targeting Debt in Pakistan: A Structural Macro-Econometric Model

Fatemah,

Haq

2024

iRASD J. Eco.

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“…A significant amount of literature is available in the context of macroeconometric modeling [9][10][11]. Akbar and Ahmad [12] present a good review and critique of macroeconometric modeling practices.…”

Section: Review Of the Literaturementioning

confidence: 99%

Import Tariff Reduction and Fiscal Sustainability: A Macro-Econometric Modelling for Ethiopia

Ramakrishna¹,

Gizaw

Paramaiah

et al. 2023

Sustainability

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The main objective of this study is to examine the dynamic impact of import tariff reduction on major macroeconomic variables and its long-run implications for the fiscal sustainability of Ethiopia. In addition, it estimates the increase in the average consumption tax required to compensate for the possible tax revenue loss and fiscal sustainability. A Recursive Dynamic Computable General Equilibrium Model (RDCGEM) is used to assess the dynamic impact on macroeconomic variables of import tariff reduction and examine the increased consumption tax required. The study is novel as there are no studies in general, and for Ethiopia in particular in this regard. We use the available 2013/2014 base year macroeconomic data from national income accounts, fiscal accounts, and balance of payments accounts of Ethiopia. The RDCGEM is calibrated to the base year data, checked for correctness, and tested for robustness using sensitivity analysis. The model then is simulated for the import tariff reduction under the base case and under various tariff reduction scenarios based on which the macroeconomic impacts of tariff reduction are analyzed. Based on the RDCGM outputs, the fiscal sustainability impact of import tariff reduction is verified, and using a cointegration method, we examine the sustainability of fiscal policy. The results suggest a 95 percent import tariff reduction that negatively impacts the major macroeconomic variables. It also leads to long-term fiscal unsustainability. The joint reform of the country has relatively better impacts on major macroeconomic variables but slightly negative effects on household income and consumption.

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“…Using a more recent economic framework, Kannapiran (2003) constructs a simple macroeconometric model of a developing economy under the IS-LM and Mundell-Fleming model framework. The aim of this model is to provide a structural framework to carry out macroeconomic analysis, forecasting and evaluating the impacts of macroeconomic policies in small open developing economies.…”

Section: Review Of Macroeconometric Modelsmentioning

confidence: 99%

A Review of Macroeconometric Modeling Practices

Akbar¹,

Ahmad²

2014

Forman j. econ. stud

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This paper presents a general historical survey of macroeconometric modeling, which includes objectives, historic background and major types of macroeconometric modeling. Historic background includes beginning of macroeconometric modeling, advancements, criticisms and responses during the course of time. Major types of macroeconomic modeling and alternatives to the basic methodology of Cowles Commission approach along with their drawbacks are discussed. At the end, review of some available macroeconometric models is presented in a tabular survey.

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A macroeconometric model of a developing economy

Cited by 6 publications

References 18 publications

Targeting Debt in Pakistan: A Structural Macro-Econometric Model

Targeting Debt in Pakistan: A Structural Macro-Econometric Model

Import Tariff Reduction and Fiscal Sustainability: A Macro-Econometric Modelling for Ethiopia

A Review of Macroeconometric Modeling Practices

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