Growth and Distribution Analysis in SAM Models: Developing Countries

Abstract

The paper introduces the social accounting matrix, SAM, and treats the conversion of the SAM into an economy wide model that employs fixed relative prices and clears market imbalances via flexible quantities. The paper reviews multiplier results relating to the trade-off between economic growth and income distribution for ten developing countries. It then continues with decomposing these multipliers in various effects, identifying sector and institutional gainers and losers, and highlighting the significance of dual structures in production (formal and informal sectors) and earnings (poor and rich household groups) in generating interdependent patterns of growth and distribution.