Budget Variation and Welfare in Cameroon: a Computable General Equilibrium Model Approach

Abstract

The objective of this paper is to determine the impact of a variation in government spending on the well-being of the population in Cameroon. We use the Computable General Equilibrium Model (CGEM) developed by Decaluwé et al., [1] calibrated on the 2016 Social Accounting Matrix (SAM) for Cameroon [1]. This SAM is constructed from the Resources and Uses Table (RUT) and national accounts data from the National Institute of Statistics [2]. The welfare is measured by the equivalent variation indicator. The results show that a 20% increase in public expenditure would contribute to improving the well-being of salaried households and capitalist households by 883.58 billion CFAF and 5.47 billion CFAF respectively. This improvement in wellbeing is achieved through a reduction in the current price of goods and services in the various sectors (0.76% for agriculture, 0.53% for industry, 0.76% for services and 0.57% for public services) on the one hand, and through an increase in household income on the other, whether they are salaried or capitalist earners.