Modelling for SDGs in Asia the Pacific (Session · • Goals 8/9/17: Understanding the role of...
Transcript of Modelling for SDGs in Asia the Pacific (Session · • Goals 8/9/17: Understanding the role of...
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
16th November 2017Thimpu, Bhutan
Outline
• Introduction• Leading ideas • Macro model @ SDGs• Case studies: China & Lao PDR• The Way forward
Introduction90 years of macro model1
Evolution & adaptation
Leading ideas2
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
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
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
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 countries‐
often 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
UN initiatives
Macromodel@SDG3
UN system initiatives
• UN/UNCTAD Model, since 1968• UN/UNDESA Project LINK, since 1969..• Regional UN models
– ECAFE/ESCAP (asince 1980s/1990s)– ECLAC– ECE– ECA– ESCWA
• World Bank‐IMF‐OECD• Regional Development Banks
– ADB– IDB
Macro model @ 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
Macro model @ 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
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 modellingissues
• 2017 November (Bhutan): LDCs graduation workshop, with participation of various LDCs/SIDS/LLDCs and experts
Work‐in‐progress
Case studies4
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
China
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 2010.
• Policy measures– Formulate the policy to deal with the inequality issues by taking into
consideration the factors such as growth, education and urbanisation
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: 1984 ‐ 2015 (annual)• Estimation: Regression anaysis• Projection & scenario analysis
– GDP forecast until 2025– TFP and investment rate for scenario analysis (2016‐2025)
Lao PDR
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
Capacity building
programmes
The way forward5
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
Thank you Tashidelek & Kaadinchhey La
Please visit www.unescap.org/publications/Email: [email protected]
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