... d'émission négociables : Etats des lieux en France sous des éclairages théoriquesJULES-E... more ... d'émission négociables : Etats des lieux en France sous des éclairages théoriquesJULES-ERIC TCHAPCHET TCHOUTO, ANAÏS DELBOSC ET LUC SAVARD Page 2. Des politiques environnementales au système de permis ...
In this paper we present an analysis of distributional impact analysis of climate change policies... more In this paper we present an analysis of distributional impact analysis of climate change policies envisaged or implemented to reduce greenhouse gasses emissions on Senegal. We consider policies implemented in developed countries (namely the ones engaged in the Kyoto protocol) and their impact on a developing country. Moreover, we simulate a diminishing productivity of land used in agriculture as a
This paper highlights the idea of combining CGE modeling with a micro-household model (micro-simu... more This paper highlights the idea of combining CGE modeling with a micro-household model (micro-simulation) to generate a convergent solution, thus providing the basis to perform counterfactual analysis of trade and fiscal policies and their impact on poverty. In recent years, a number of papers have presented different approaches using CGE models to analyze poverty. Among them, the standard CGE models, which generates changes in the income of representative households in order to allow poverty analysis, albeit with no intra-group changes in the distribution; CGE models with high levels of household desegregation (3200) and the micro-simulation approach to modeling (with no feedback effect to the CGE model). In this paper, we provide an alternative to these methods that allows for richer microhousehold modeling then the first two approaches while keeping the properties of standard CGE (feedback effect of household behavior) which is usually simplified in micro-simulation context. We also introduce segmented labor markets with waiting unemployment inspired by , which provides a basis for important changes in household income (i.e. when a worker leaves unemployment or becomes unemployed). Global and decomposable poverty analysis and income distribution indicators are computed at base year and after a 50% reduction in trade.
In this paper we use a top-down bottom-up microsimulation CGE model with endogenous labour supply... more In this paper we use a top-down bottom-up microsimulation CGE model with endogenous labour supply and unemployment to explore the impact of scaling up infrastructure in the Philippines. In the context of the debate on the importance of scaling up infrastructure to stimulate growth, some analysts raise concerns on the negative macroeconomic impact (Dutch disease effect). This study aims to provide some insight into this debate by extending the analysis with the inclusion of distributional impact evaluation. We draw from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes for operating costs associated with new infrastructure. We investigate two fiscal tools and foreign aid to fund the new infrastructure and operation and maintenance costs. The distributional analysis is performed with FGT indices and growth incidence curves. Our results reveal positive poverty reduction and differences between funding schemes with foreign aid providing the most equitable option and the value added tax, the strongest poverty reduction.
In this paper, we explore the contribution of introducing a flexible form for household consumpti... more In this paper, we explore the contribution of introducing a flexible form for household consumption in a macro-micro modelling context for poverty and income distribution analysis. The almost ideal demand system exhibits interesting features allowing for the introduction of inter-household heterogeneity in a rigorous fashion. In order to illustrate the contribution of the AIDS system in the macro-micro modelling context, we perform a comparative analysis with an equivalent model using a LES demand system and a CGE with representative households including an AIDS. Results show the strong contribution of using an almost ideal demand system in a microsimulation context and its value added versus a linear expenditure system to analyse poverty and income distribution changes following a policy simulation.
Toutefois, cette fonction a aussi des propriétés (non quasi-concavité globale) peut rendre son ut... more Toutefois, cette fonction a aussi des propriétés (non quasi-concavité globale) peut rendre son utilisation dans le contexte de modélisation en EGC difficile. Afin de montrer la contribution d'introduire le système de demande AIDS, nous comparons les résultats avec un modèle à agent représentatif ainsi qu'avec un modèle micro-simulation EGC-TD/BU utilisant un système de demande AIDS. Les résultats montre que la mesure de changement de bien-être qui correspond au système de demande AIDS est très sensible aux changements de revenu et de prix généré par le modèle. Par conséquent, les variations des indices de pauvreté et d'inégalité sont beaucoup plus fortes que celle observé dans un modèle à agent représentatif et avec un modèle utilisant le système de demande linéaire.
The economic literature has been investigating the positive relation between public infrastructur... more The economic literature has been investigating the positive relation between public infrastructure spending and the productivity of the private sector since Munnell (1992). We have thus introduced this relation into the recursive dynamic computable general equilibrium model of Quebec to assess the economic impacts of scaling up infrastructure on the economy. We use we draw our assumptions from Estache et
enthält eine Bestandsaufnahme von Modellierungsoptionen für den Arbeitsmarkt im Rahmen einer nume... more enthält eine Bestandsaufnahme von Modellierungsoptionen für den Arbeitsmarkt im Rahmen einer numerischen allgemeinen Gleichgewichtsanalyse (CGE). Wir strukturieren diese Bestandsaufnahme in drei große Teile: Arbeitsangebot, Arbeitsnachfrage und Arbeitsmarktkoordination. Auf der Arbeitsangebotsseite lauten die beiden prinzipiellen Modellierungsoptionen: aggregierte, representative Haushalte und Mikrosimulation auf der Basis von Individualdaten. Im Rahmen einer CGE-Analyse hat Mikrosimulation eine Reihe von Vorteilen (direkter Bezug zu empirischen Arbeitsangebotsschätzungen, Explizitheit in Verteilungsfragen) und vermeidet Probleme, die typischerweise bei der Bestimmung der Eigenschaften aggregierter Haushalte auftreten. Wir sehen sie deshalb als das für viele Arbeitsmarktfragestellungen gebotene Instrument an. Auf der Arbeitsnachfrageseite ist das im Rahmen einer CGE-Analyse kritische Element die Substituierbarkeit von verschiedenen Typen Arbeit. Die Arbeitsangebotsanalyse legt eine große Zahl möglicher Arbeitsklassifikationen nahe. Nur für die wenigsten davon gibt es eine empirisch gesicherte Basis für die Nachfragebedingungen. In unseren Augen sollte der Ausgangspunkt einer Nachfragemodellierung immer vollständige Substituierbarkeit (Effizienzgewichtete Addition unterschiedlicher Typen Arbeit) sein, es sei denn es gibt empirische Belege dafür, dass die relativen Preise auf ein Auseinanderlaufen des Angebots systematisch reagieren. Bei der Modellierung der Arbeitsmarktkoordination sehen wir uns einem Dilemma gegenüber. Idealerweise würden wir ein theoretisch fundiertes, strukturelles Modell unfreiwilliger Arbeitslosigkeit verwenden, das hinreichend freie Parameter enthält, so dass es auf empirische Lohnelastizitäten kalibriert werden kann. Dieses Ideal ist bislang in der Modellierung nicht erreicht. Einfachen strukturelle Modellen fehlt es an der Flexibilität der empirischen Anpassung, während das direkte Arbeiten mit empirischen Elastiziäten die ökonomische Interpretation von Löhnänderungen als Resultat von Veränderungen der Umgebungsvariablen erschwert.
We have observed a flourishing literature in recent years on the use of CGE models to perform pov... more We have observed a flourishing literature in recent years on the use of CGE models to perform poverty and income distribution analysis. In this context two approaches have emerged and no rigorous comparison of the two approaches has been done yet. The first approach is the traditional representative agent that has been used for a number of year to do inter group distributional analysis and more recently some extensive poverty analysis and the second approach is the microsimulation CGE approach which consists of using large number of households in CGE models to perform poverty and income distribution analysis. In this paper we used three simple CGE models with representative agent and micro-simulation approaches to verify -if when used in a context of poverty and income distribution impact analysis -the two approaches produces compatible results. We concentrated our effort in using three simple models and adding some heterogeneity from one to the other to verify if changes in hypothesis would modify the differences or similarities we would obtain in the exercise. The results are quit surprising insofar as either for poverty analysis or for income distribution, the two approaches produce systematic opposite results. Pro-poor policies in the representative agent CGE model become a pro-rich policy when being analysed in a micro-simulation CGE context. And these results appear to be quit robust.
Climate change policies will have distributional consequences across and within countries. Most o... more Climate change policies will have distributional consequences across and within countries. Most of the current environmental policy instruments tend to be regressive and impose a higher burden on the poor. Despite their limitations, more systematic incidence assessments for CC policies are needed so that adaptation and mitigation policies address their distributional effects within countries.
In this paper, we provide an overview of approaches used to model income distribution and poverty... more In this paper, we provide an overview of approaches used to model income distribution and poverty in CGE models. CGE models have started to use income distribution functional forms such as the lognormal, Pareto, beta distribution and Kernel non-parametric methods to apply FGT poverty indices. None of the authors of these papers have gone into much detail to justify the use of one method or functional form over the other, within the context of this type of work. Extensive literature exists on the choice of functional forms to estimate income distribution; however it has not been utilized in the CGE context. Given the fact that the desegregation of groups of households can be important in CGE analysis and the fact that the impact on income of policy simulations are often small in CGE models, we investigate the importance of the choice of the functional form used to estimate the income distribution of groups of households. We compare six functional forms with parametric estimation and on a non-parametric method. Results show that no single form is more appropriate in all cases or groups of households. The characteristics of samples and subgroups play an important role and the choice should be guided by the best fitting distribution.
This paper aims to evaluate the relevance of different types of macroeconomic general equilibrium... more This paper aims to evaluate the relevance of different types of macroeconomic general equilibrium modelling for measuring the impact of economic policy shocks on the incidence of poverty and on the distribution of income. In the literature three approaches are identified. The first is based on a traditional form of the CGEM which specifies a large number of households. In this case, we can only observe inter group income inequalities. The next uses survey data to estimate the distribution function and average variations by group, which allows one to estimate the evolution of poverty. The third approach, which we present in detail, includes individual data directly in the general equilibrium model according to the principles of micro simulations. This treatment provides a more reliable picture of income distribution but is also more complex. Given this, we develop, within a co-ordinated statistical framework representing an archetypal economy, the three types of model described above. More precisely, this exercise allows us to break down the contribution of average income variations, of the poverty line, and of income distribution in the evolution of the main poverty indicators. The results obtained show the importance of intra group information and therefore the relevance of micro simulation exercises.
Ce papier vise à évaluer la pertinence des différents types de modélisation macroéconomique en éq... more Ce papier vise à évaluer la pertinence des différents types de modélisation macroéconomique en équilibre général pour mesurer l'impact des chocs de politique économique sur l'incidence de la pauvreté et la distribution du revenu. Dans la littérature on peut identifier trois types d'exercices. Le premier repose sur une forme traditionnelle de MEGC spécifiant un grand nombre de ménages. Dans ce cadre on peut seulement observer les inégalités de revenu inter groupe. Le suivant utilise des données d'enquête pour estimer la fonction de distribution et lui applique les variations moyennes par groupe, ce qui permet d'estimer l'évolution de la pauvreté. Le dernier enfin, que nous présentons plus en détail, inclus les données individuelles directement dans le modèle d'équilibre général selon le principe des micro simulations. Cette approche donne une image plus fidèle de la distribution de revenu mais est également plus complexe à mettre en oeuvre. Dans cette perspective, nous développons les trois types de modélisation précédemment décrits, dans un cadre statistique coordonné représentant une économie archétype. Plus précisément, cet exercice nous permet de décomposer la contribution des variations de revenu moyen, de la ligne de pauvreté et des distributions de revenu dans l'évolution des principaux indicateurs de pauvreté. Les résultats obtenus démontrent l'importance des informations intra groupe et donc la pertinence des exercices de micro simulation. ' $!+' ! # Les auteurs remercient vivement Denis Cogneau (IRD-DIAL) pour ses très précieux conseils et pour sa contribution. Ils restent néanmoins seuls responsables des erreurs ou insuffisances que ce travail pourrait receler.
In this paper we use a computable general equilibrium model to study the impact of a trade shock ... more In this paper we use a computable general equilibrium model to study the impact of a trade shock and a tariff reform on household poverty for an archetype developing country. Unlike other studies, we present the income distribution of each household group as a Beta statistical distribution. Also, the income distributions are endogenous in this model. Following a change in the mean income, the income distribution will shift proportionally by the same variation. In contrast of other study, this paper presents the poverty lines as being endogenous. With this specification, the poverty line will change following a variation in relative prices. With the new distributions and poverty line, the poverty levels of the base year are compared with the ex-post values. The Foster, Greer and Thorbecke's (1984) P α class measures are used to quantify the households' poverty levels. We consider two scenarios. The first is a 30% fall in the world price of the country's export crop and the second is a reduction of 50% in the country's import tariffs. For the fall in the world price of the country's export crop, results indicate a drop in all household incomes and a decrease in the poverty line. A unilateral trade liberalization also has negative consequences on all household incomes. As in the first simulation, the poverty line decreases with a unilateral trade liberalization. The effect of the poverty line is non-negligible in both simulations. In the trade liberalization simulation, the poverty line effect counters the income effect in most cases (P α . improves). In the other simulation, the poverty line effect attenuates the decrease in the poverty measures.
... d'émission négociables : Etats des lieux en France sous des éclairages théoriquesJULES-E... more ... d'émission négociables : Etats des lieux en France sous des éclairages théoriquesJULES-ERIC TCHAPCHET TCHOUTO, ANAÏS DELBOSC ET LUC SAVARD Page 2. Des politiques environnementales au système de permis ...
In this paper we present an analysis of distributional impact analysis of climate change policies... more In this paper we present an analysis of distributional impact analysis of climate change policies envisaged or implemented to reduce greenhouse gasses emissions on Senegal. We consider policies implemented in developed countries (namely the ones engaged in the Kyoto protocol) and their impact on a developing country. Moreover, we simulate a diminishing productivity of land used in agriculture as a
This paper highlights the idea of combining CGE modeling with a micro-household model (micro-simu... more This paper highlights the idea of combining CGE modeling with a micro-household model (micro-simulation) to generate a convergent solution, thus providing the basis to perform counterfactual analysis of trade and fiscal policies and their impact on poverty. In recent years, a number of papers have presented different approaches using CGE models to analyze poverty. Among them, the standard CGE models, which generates changes in the income of representative households in order to allow poverty analysis, albeit with no intra-group changes in the distribution; CGE models with high levels of household desegregation (3200) and the micro-simulation approach to modeling (with no feedback effect to the CGE model). In this paper, we provide an alternative to these methods that allows for richer microhousehold modeling then the first two approaches while keeping the properties of standard CGE (feedback effect of household behavior) which is usually simplified in micro-simulation context. We also introduce segmented labor markets with waiting unemployment inspired by , which provides a basis for important changes in household income (i.e. when a worker leaves unemployment or becomes unemployed). Global and decomposable poverty analysis and income distribution indicators are computed at base year and after a 50% reduction in trade.
In this paper we use a top-down bottom-up microsimulation CGE model with endogenous labour supply... more In this paper we use a top-down bottom-up microsimulation CGE model with endogenous labour supply and unemployment to explore the impact of scaling up infrastructure in the Philippines. In the context of the debate on the importance of scaling up infrastructure to stimulate growth, some analysts raise concerns on the negative macroeconomic impact (Dutch disease effect). This study aims to provide some insight into this debate by extending the analysis with the inclusion of distributional impact evaluation. We draw from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes for operating costs associated with new infrastructure. We investigate two fiscal tools and foreign aid to fund the new infrastructure and operation and maintenance costs. The distributional analysis is performed with FGT indices and growth incidence curves. Our results reveal positive poverty reduction and differences between funding schemes with foreign aid providing the most equitable option and the value added tax, the strongest poverty reduction.
In this paper, we explore the contribution of introducing a flexible form for household consumpti... more In this paper, we explore the contribution of introducing a flexible form for household consumption in a macro-micro modelling context for poverty and income distribution analysis. The almost ideal demand system exhibits interesting features allowing for the introduction of inter-household heterogeneity in a rigorous fashion. In order to illustrate the contribution of the AIDS system in the macro-micro modelling context, we perform a comparative analysis with an equivalent model using a LES demand system and a CGE with representative households including an AIDS. Results show the strong contribution of using an almost ideal demand system in a microsimulation context and its value added versus a linear expenditure system to analyse poverty and income distribution changes following a policy simulation.
Toutefois, cette fonction a aussi des propriétés (non quasi-concavité globale) peut rendre son ut... more Toutefois, cette fonction a aussi des propriétés (non quasi-concavité globale) peut rendre son utilisation dans le contexte de modélisation en EGC difficile. Afin de montrer la contribution d'introduire le système de demande AIDS, nous comparons les résultats avec un modèle à agent représentatif ainsi qu'avec un modèle micro-simulation EGC-TD/BU utilisant un système de demande AIDS. Les résultats montre que la mesure de changement de bien-être qui correspond au système de demande AIDS est très sensible aux changements de revenu et de prix généré par le modèle. Par conséquent, les variations des indices de pauvreté et d'inégalité sont beaucoup plus fortes que celle observé dans un modèle à agent représentatif et avec un modèle utilisant le système de demande linéaire.
The economic literature has been investigating the positive relation between public infrastructur... more The economic literature has been investigating the positive relation between public infrastructure spending and the productivity of the private sector since Munnell (1992). We have thus introduced this relation into the recursive dynamic computable general equilibrium model of Quebec to assess the economic impacts of scaling up infrastructure on the economy. We use we draw our assumptions from Estache et
enthält eine Bestandsaufnahme von Modellierungsoptionen für den Arbeitsmarkt im Rahmen einer nume... more enthält eine Bestandsaufnahme von Modellierungsoptionen für den Arbeitsmarkt im Rahmen einer numerischen allgemeinen Gleichgewichtsanalyse (CGE). Wir strukturieren diese Bestandsaufnahme in drei große Teile: Arbeitsangebot, Arbeitsnachfrage und Arbeitsmarktkoordination. Auf der Arbeitsangebotsseite lauten die beiden prinzipiellen Modellierungsoptionen: aggregierte, representative Haushalte und Mikrosimulation auf der Basis von Individualdaten. Im Rahmen einer CGE-Analyse hat Mikrosimulation eine Reihe von Vorteilen (direkter Bezug zu empirischen Arbeitsangebotsschätzungen, Explizitheit in Verteilungsfragen) und vermeidet Probleme, die typischerweise bei der Bestimmung der Eigenschaften aggregierter Haushalte auftreten. Wir sehen sie deshalb als das für viele Arbeitsmarktfragestellungen gebotene Instrument an. Auf der Arbeitsnachfrageseite ist das im Rahmen einer CGE-Analyse kritische Element die Substituierbarkeit von verschiedenen Typen Arbeit. Die Arbeitsangebotsanalyse legt eine große Zahl möglicher Arbeitsklassifikationen nahe. Nur für die wenigsten davon gibt es eine empirisch gesicherte Basis für die Nachfragebedingungen. In unseren Augen sollte der Ausgangspunkt einer Nachfragemodellierung immer vollständige Substituierbarkeit (Effizienzgewichtete Addition unterschiedlicher Typen Arbeit) sein, es sei denn es gibt empirische Belege dafür, dass die relativen Preise auf ein Auseinanderlaufen des Angebots systematisch reagieren. Bei der Modellierung der Arbeitsmarktkoordination sehen wir uns einem Dilemma gegenüber. Idealerweise würden wir ein theoretisch fundiertes, strukturelles Modell unfreiwilliger Arbeitslosigkeit verwenden, das hinreichend freie Parameter enthält, so dass es auf empirische Lohnelastizitäten kalibriert werden kann. Dieses Ideal ist bislang in der Modellierung nicht erreicht. Einfachen strukturelle Modellen fehlt es an der Flexibilität der empirischen Anpassung, während das direkte Arbeiten mit empirischen Elastiziäten die ökonomische Interpretation von Löhnänderungen als Resultat von Veränderungen der Umgebungsvariablen erschwert.
We have observed a flourishing literature in recent years on the use of CGE models to perform pov... more We have observed a flourishing literature in recent years on the use of CGE models to perform poverty and income distribution analysis. In this context two approaches have emerged and no rigorous comparison of the two approaches has been done yet. The first approach is the traditional representative agent that has been used for a number of year to do inter group distributional analysis and more recently some extensive poverty analysis and the second approach is the microsimulation CGE approach which consists of using large number of households in CGE models to perform poverty and income distribution analysis. In this paper we used three simple CGE models with representative agent and micro-simulation approaches to verify -if when used in a context of poverty and income distribution impact analysis -the two approaches produces compatible results. We concentrated our effort in using three simple models and adding some heterogeneity from one to the other to verify if changes in hypothesis would modify the differences or similarities we would obtain in the exercise. The results are quit surprising insofar as either for poverty analysis or for income distribution, the two approaches produce systematic opposite results. Pro-poor policies in the representative agent CGE model become a pro-rich policy when being analysed in a micro-simulation CGE context. And these results appear to be quit robust.
Climate change policies will have distributional consequences across and within countries. Most o... more Climate change policies will have distributional consequences across and within countries. Most of the current environmental policy instruments tend to be regressive and impose a higher burden on the poor. Despite their limitations, more systematic incidence assessments for CC policies are needed so that adaptation and mitigation policies address their distributional effects within countries.
In this paper, we provide an overview of approaches used to model income distribution and poverty... more In this paper, we provide an overview of approaches used to model income distribution and poverty in CGE models. CGE models have started to use income distribution functional forms such as the lognormal, Pareto, beta distribution and Kernel non-parametric methods to apply FGT poverty indices. None of the authors of these papers have gone into much detail to justify the use of one method or functional form over the other, within the context of this type of work. Extensive literature exists on the choice of functional forms to estimate income distribution; however it has not been utilized in the CGE context. Given the fact that the desegregation of groups of households can be important in CGE analysis and the fact that the impact on income of policy simulations are often small in CGE models, we investigate the importance of the choice of the functional form used to estimate the income distribution of groups of households. We compare six functional forms with parametric estimation and on a non-parametric method. Results show that no single form is more appropriate in all cases or groups of households. The characteristics of samples and subgroups play an important role and the choice should be guided by the best fitting distribution.
This paper aims to evaluate the relevance of different types of macroeconomic general equilibrium... more This paper aims to evaluate the relevance of different types of macroeconomic general equilibrium modelling for measuring the impact of economic policy shocks on the incidence of poverty and on the distribution of income. In the literature three approaches are identified. The first is based on a traditional form of the CGEM which specifies a large number of households. In this case, we can only observe inter group income inequalities. The next uses survey data to estimate the distribution function and average variations by group, which allows one to estimate the evolution of poverty. The third approach, which we present in detail, includes individual data directly in the general equilibrium model according to the principles of micro simulations. This treatment provides a more reliable picture of income distribution but is also more complex. Given this, we develop, within a co-ordinated statistical framework representing an archetypal economy, the three types of model described above. More precisely, this exercise allows us to break down the contribution of average income variations, of the poverty line, and of income distribution in the evolution of the main poverty indicators. The results obtained show the importance of intra group information and therefore the relevance of micro simulation exercises.
Ce papier vise à évaluer la pertinence des différents types de modélisation macroéconomique en éq... more Ce papier vise à évaluer la pertinence des différents types de modélisation macroéconomique en équilibre général pour mesurer l'impact des chocs de politique économique sur l'incidence de la pauvreté et la distribution du revenu. Dans la littérature on peut identifier trois types d'exercices. Le premier repose sur une forme traditionnelle de MEGC spécifiant un grand nombre de ménages. Dans ce cadre on peut seulement observer les inégalités de revenu inter groupe. Le suivant utilise des données d'enquête pour estimer la fonction de distribution et lui applique les variations moyennes par groupe, ce qui permet d'estimer l'évolution de la pauvreté. Le dernier enfin, que nous présentons plus en détail, inclus les données individuelles directement dans le modèle d'équilibre général selon le principe des micro simulations. Cette approche donne une image plus fidèle de la distribution de revenu mais est également plus complexe à mettre en oeuvre. Dans cette perspective, nous développons les trois types de modélisation précédemment décrits, dans un cadre statistique coordonné représentant une économie archétype. Plus précisément, cet exercice nous permet de décomposer la contribution des variations de revenu moyen, de la ligne de pauvreté et des distributions de revenu dans l'évolution des principaux indicateurs de pauvreté. Les résultats obtenus démontrent l'importance des informations intra groupe et donc la pertinence des exercices de micro simulation. ' $!+' ! # Les auteurs remercient vivement Denis Cogneau (IRD-DIAL) pour ses très précieux conseils et pour sa contribution. Ils restent néanmoins seuls responsables des erreurs ou insuffisances que ce travail pourrait receler.
In this paper we use a computable general equilibrium model to study the impact of a trade shock ... more In this paper we use a computable general equilibrium model to study the impact of a trade shock and a tariff reform on household poverty for an archetype developing country. Unlike other studies, we present the income distribution of each household group as a Beta statistical distribution. Also, the income distributions are endogenous in this model. Following a change in the mean income, the income distribution will shift proportionally by the same variation. In contrast of other study, this paper presents the poverty lines as being endogenous. With this specification, the poverty line will change following a variation in relative prices. With the new distributions and poverty line, the poverty levels of the base year are compared with the ex-post values. The Foster, Greer and Thorbecke's (1984) P α class measures are used to quantify the households' poverty levels. We consider two scenarios. The first is a 30% fall in the world price of the country's export crop and the second is a reduction of 50% in the country's import tariffs. For the fall in the world price of the country's export crop, results indicate a drop in all household incomes and a decrease in the poverty line. A unilateral trade liberalization also has negative consequences on all household incomes. As in the first simulation, the poverty line decreases with a unilateral trade liberalization. The effect of the poverty line is non-negligible in both simulations. In the trade liberalization simulation, the poverty line effect counters the income effect in most cases (P α . improves). In the other simulation, the poverty line effect attenuates the decrease in the poverty measures.
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