This paper provides a technical description of GEM-PIA, a recursive-dynamic computable General Equilibrium Model for Poverty Impact Analysis in individual countries. The model combines the optimizing behavior of CGE models with the asset portfolio behavior of macromodels, thereby addressing the role of financial markets. Moreover, the model is linked to household survey information, thereby capturing the socio-economic characteristics of individual households. GEM-PIA can be used for counterfactual analysis of external shocks as well as various policies at the macro and meso level, and to assess their allocational and distributional consequences. The model is calibrated to Bolivian data and its working is illustrated in two scenarios: A permanent rise of gas exports and a temporary devaluation.
- Computable General Equilibrium Model
- income distribution
- Portfolio Choice