Computable general equilibrium models, adjustment and the poor in Africa

Sahn and others at Cornell have conducted a major research program on the i mpact of adjustment policies on the poor in Africa. making use of Computabl e General Equilibrium (CGE) models. Their work was summarized in World Deve lopment April 1996. They concluded that adjustment policies have not hurt a nd may have helped the poor. This paper shows that such conclusions are hig hly dependent on the assumptions made about parameters. relationships and c losure in the models. Moreover. in Madagascar and Tanzania, where the Corne ll models suggest the poor benefited from adjustment, there is evidence of worsening social and economic indicators. Our conclusion is that the Cornel l results are more a reflection of the assumptions made in developing the C GE models than of reality. (C) 1999 Elsevier Science Ltd. All rights reserv ed.