Poverty and income distribution in a CGE - household sequential model

Often policy makers are required to present a framework for linkages between macroeconomic reforms and poverty. This paper highlights a model that combines computable general equilibrium (CGE) modelling with a micro-household model (micro-simulation), allowing for richer modelling while keeping the properties of standard CGE (feedback effect on household behaviour). The paper also introduces factors of segmented labour markets, and waiting unemployment, which provides a basis for recognizing changes in household income (i.e. when a worker leaves unemployment or becomes unemployed). Advantages are: no obligation of scaling household data to national accounts; and no need to balance income and expenditure