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External Shocks, Fiscal Policy and Income Distribution : Alternative Scenarios for Moldova / Jouko Kinnunen
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Kinnunen, Jouko
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Computable General Equilibrium.
- Currencies and Exchange Rates.
- Debt Markets.
- Development Strategy.
- Economic Theory & Research.
- Emerging Markets.
- Labor Policies.
- Macroeconomics and Economic Growth.
- MAMS.
- Poverty Reduction.
- Moldova.
- Local Subjects:
- Computable General Equilibrium.
- Currencies and Exchange Rates.
- Debt Markets.
- Development Strategy.
- Economic Theory & Research.
- Emerging Markets.
- Labor Policies.
- Macroeconomics and Economic Growth.
- MAMS.
- Poverty Reduction.
- Moldova.
- Physical Description:
- 1 online resource (47 pages)
- Other Title:
- External Shocks, Fiscal Policy and Income Distribution
- Place of Publication:
- Washington, D.C., The World Bank, 2013
- System Details:
- data file
- Summary:
- The economy of Moldova, which has one of the lowest levels of gross national income per capita in the World Bank Europe and Central Asia region, is strongly linked to the outside world, especially to the neighboring countries of the European Union and the Commonwealth of Independent States. This paper analyzes a set of scenarios for Moldova up to 2020, defined to shed light on issues related to an alternative future dominated by goods and services exports as opposed to today's reliance on worker remittances. The analysis is based on a Moldovan version of MAMS (Maquette for Millennium Development Goal Simulations), a CGE (Computable General Equilibrium) model for country strategy analysis. In sum, the impact of increased export demand and productivity growth is more positive when these shocks are directed to manufacturing, a sector more heavily linked to international trade, compared with agriculture. Increased productivity in transport and communications generates faster growth with widely diffused benefits, reaching households in a relatively equitable manner compared with foreign trade-induced growth. A comparison between adverse shocks in two areas, higher energy import prices, and lower remittances, designed to have similar effects on gross domestic product, suggests that a remittance shock leads to less of a poverty increase, related to the fact that remittance-receiving households are not highly vulnerable; among sectors, agriculture is most vulnerable due to heavy energy reliance. Finally, well-targeted transfer schemes may offer an effective tool for diffusing the benefits of economic growth to the whole population, perhaps also contributing to more general acceptance of structural change.
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