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The Conjuncture of Poverty Microsimulation Linked to a Macroeconomic Forecasting Model: A Case Study in Senegal

  • Year: 2004
  • Author(s): Thierry Latreille

Poverty reduction policies have become the main guidelines of economic policies in many Sub-Saharan African countries. Therefore the authorities need new social indicators in order to follow the application and the effectiveness of their policies. In recent years renewed efforts have been made to develop new policy tools aimed at better understanding the channels through which PRSP measures affect the poor. We present an approach to linking macro models with representative households and micro household income data in terms of measuring poverty and the distributional effects of poverty reduction policies. This is a simple micro-accounting method which presents an interesting opportunity for linkage to a macro economic forecasting model, the Jumbo model run by the AFD for the CFA Franc Zone. Our approach consists of using a macroeconomic forecasting model (Jumbo) that integrates several representative household groups. An output of the forecast is introduced into a simple model of microsimulation in order to obtain yearly poverty and income distribution indicators. The interpretation of the results with the help of the macroeconomic environment described in the Jumbo model allows an analysis of the conjuncture of poverty.