Computable general equilibrium models, adjustment and the poor in Africa

Sahn and others at Cornell have conducted a major research program on the impact of adjustment policies on the poor in Africa. making use of Computable General Equilibrium (CGE) models. Their work was summarized in World Development April 1996. They concluded that adjustment policies have not hurt and may have helped the poor. This paper shows that such conclusions are highly dependent on the assumptions made about parameters. relationships and closure in the models. Moreover. in Madagascar and Tanzania, where the Cornell models suggest the poor benefited from adjustment, there is evidence of worsening social and economic indicators. Our conclusion is that the Cornell results are more a reflection of the assumptions made in developing the CGE models than of reality. (C) 1999 Elsevier Science Ltd. All rights reserved.