General equilibrium models for development policy

This comprehensive survey of multisector, economy-wide planning models weighs their power to address issues of trade, distribution, growth, and structural change. The authors combine theoretical discussion of the properties of applied equilibrium models with numerical applications to particular countries, and problems. The models consider ranges from input-output and linear programming to the more recent nonlinear computable general equilibrium models. The authors examine how these models can be used to measure growth and structural change, to select an appropriate foreign exchange regimen, and to evaluate the impact of alternative development strategies on the distribution of income. The empirical applications draw on the experience of particular countries, and comparisons among countries to demonstrate how such models provide a useful framework for policy analysis. Particular attention is given to the difficulties of formulating plans and policies in mixed-market economies and to the problems of capturing the real constraints on policymakers within the abstractions of a model.

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