2003), Trade Liberalisation and Spatial Inequality: Methodological Innovations in Vietnamese Perspective, Paper presented at the Spatial Inequality

This paper develops a SAM database encompassing 6,002 representative Vietnamese households, mapping one-to-one with 16 aggregate households. The database is used to calibrate two Computable General Equilibrium (CGE) models with respectively 16 aggregate and 6,002 disaggregate households. Aggregate model results are com-pared to those of the disaggregated model to demonstrate the importance of endoge-nous modelling of micro households within a static CGE model framework. The methodology of relying on a consistent micro-household data-set achieves the twin objectives of allowing for changes in the distribution of household expenditures and the possibility of computing poverty measures at a very disaggregate level. As such, we aim at contributing with methodological advances in the assessment of the poverty impact of macro-policies. Standard changes in trade policy are in focus in this paper. Poverty measures used are, however, re-normalised versions of traditional Foster-Greer-Thorbecke (FGT) poverty measures. We argue that FGT poverty measures should be normalised on the number of poor individuals within a given group rather than on the group population. Our simulations indicate that poverty will rise following a revenue-neutral lowering of trade taxes, which we interpret as a worst case scenario. This leads us to suggest that the government should be proactive in combining trade liberalization efforts with a proper fiscal response in order to avoid increasing poverty in the short- to medium-term