Macroeconomic Modelling for SDGs in Asia and the Pacific (Session 8)

Transcription

1 Regional Capacity Building Workshop Formulating National Policies and Strategies in Preparation for Graduation from the LDC Category Macroeconomic Modelling for SDGs in Asia and the Pacific (Session 8) Sudip Ranjan Basu, Ph.D. CSN, MPFD 16 th November 2017 Thimpu, Bhutan

2 Outline Introduction Leading ideas Macro SDGs Case studies: China & Lao PDR The Way forward

3 1 Introduction 90 years of macro model

4 2 Leading ideas Evolution & adaptation

5 Process of change & adaptation The evolution Looking backward reminiscing and looking forward dreaming Development of macromodel followed economic theories and thoughts Forecasting (sort to medium term outlook) Policy simulation & evaluation

6 Macro model building Data requirements Real sector & financial sector statistics Technical framework Expertise in various softwares (i.e., Eviews, Stata) Trained manpower Officials trained in running the model, and prepare national forecasts and policy scenarios Financial resources Maintain the infrastructure

7 Various types of macro model Characteristics of models: Keynesian type Econometric techniques to estimate parameter values Frequency: Annual + high frequency (quarterly and monthly) Size of models Small to large size models depend on country & data Simple interactive to complex type Sectors, linkages & transmission mechanism

8 Proto type macro model Comparison of the different time series Check estimated coefficients External shocks (i.e., commodity prices) Ex post & ex post policy impact assessment Lessons learnt: One country model is at great variance with others, behavioral equations have not been adequately estimated Some equations have to be estimated in different countriesoften has be re specified and re estimated several times Iterations leads to the formulation of general and robust equations to simulate the working of economic relationships

9 3 UN initiatives

10 UN system initiatives UN/UNCTAD Model, since 1968 UN/UNDESA Project LINK, since Regional UN models ECAFE/ESCAP (asince 1980s/1990s) ECLAC ECE ECA ESCWA World Bank IMF OECD Regional Development Banks ADB IDB

11 Macro MDGs MDG costing analysis Attainment of various Goals Lessons learnt Policy modelers need to be in touch with emerging policy priorities and constraints and engaged in frequent dialogue with policymakers Important part of efficient policymaking decision makers to act rationally by making them fully aware of the repercussions and of the potential policy reforms to steer economy wide impact analysis

12 Macro SDGs Goal 1: Estimating impact on poverty by national &/or regional macroeconomic policy spillover Goals 8/9/17: Understanding the role of industrial, trade, financial sector policies Goal 10: Social sector policies affecting inequality Goal 13: Climate change measures into national policies

13 ESCAP Macro model related initiatives since 2015 Capacity building workshops 2015 December (Bangkok): Macroeconomic model Regional Workshop, with participation of over 20 countries including CSN, Developing and Developed countries 2016 June (Lao PDR): LDCs regional workshop, with participation of Asia Pacific LDCs and experts in modelling issues 2017 November (Bhutan): LDCs graduation workshop, with participation of various LDCs/SIDS/LLDCs and experts

14 4 Case studies Work inprogress

15 China Large country model Model size: Medium size model 8 blocks, 60 equations, of which 31 are estimated behavioral equations, and 29 are identities. Extension: Include sub models Goal 10: Inequality added, with urban & rural seperation Data: 1992Q1 2014Q4 (Quarterly) Estimation: Behavioral equations are specified in Error Correction (ECM) form Projection & scenario analysis

16 Initial model findings Results (in China): Reductions in inequality are due to economic growth (+), education level (+) & urbanization rate ( ) Turing point in 2010: China reached a relatively high level inequality indicators have gradually declined since Policy measures Formulate the policy to deal with the inequality issues by taking into consideration the factors such as growth, education and urbanisation

17 Lao PDR LDC model Small size: Small scale model 4 equations Production function (GDP) with labour, capital, investment Extension: Goals related Goal 6, Goal 9, Goal 11 and Goal 13 Data: (annual) Estimation: Regression anaysis Projection & scenario analysis GDP forecast until 2025 TFP and investment rate for scenario analysis ( )

18 Initial model findings Results (in Lao PDR): Impacts on GDP are due to access to WS (+), Share Agriculture VA ( ) urbanization rate (+), CO2 emission reduction (+) Turing point in 2020: Simulation results identify impact on GDP Under various assumptions, policy impact changes on GDP. Policy measures Formulate the policy to deal with the various SDGs issues by taking into consideration the factors such as urbanization, structural transformation, social services and action on climate change

19 5 The way forward Capacity building programmes

20 LDC specific macro model support UN/ESCAP support measures may include : To enhance Capacity of policymakers and experts on understanding and formulating policy questions within the macro model framework at the national level To strengthen institutional capacity to develop expertise of agencies within Government departments dealing with SDGs To augment coherence and coordination between model experts and policymakers

21 Thank you Tashidelek & Kaadinchhey La Please visit twitter.com/unescap facebook.com/unescap youtube.com/unescap 21