Experts urge to adopt proper macro-economic models

Experts urge to adopt proper macro-economic models
Nepalbiznews.com, 06-May-07

Economists and experts have proposed for adopting proper-macro-economic models that would properly evaluate country’s trade and economic policies as well as carry out impact assessment of major national programmes.

They have proposed for the adoption of models like Social Accounting Matrix (SAM) and Computable General Equilibrium Model (CGE) for policy analysis and evaluation of major development agendas impact like the Millennium Development Goals (MDGs), Poverty Reduction Strategy Paper (PRSP) and other national programmes.

Speaking at a programme organised by the Ministry of Industry, Commerce and Supplies MoICS), Enhancing Nepal’s Trade Related Capacity (ENTReC-UNDP) and Institute for Policy Research and Development (IPRAD) Saturday, Dr Posh Raj Pandey, member of the National Planning Commission (NPC) commented that CGE and SAM models leave an impact result of the policies and programmes.

“The government is implementing these models for national economic development and poverty reduction initiatives.”

Dr Pandey said, “if we change our resource allocation in certain sectors, what impact economy will have. CGE and SAM models can be effective tools to review in such conditions.”

“We need to build our mechanisms to see effective implementation of such macro-econometric models so that implementation of policies impact for poverty reduction and economic advancement would be realised,” he added.

Presenting a paper on ‘SAM and CGE: Use in Trade Policy Analysis,’ Dr Dilli Raj Khanal, CPN-UML lawmaker highlighted the importance of macro-economic models and their effective implementation in Nepali economy in a changed trading environment.

Dr Khanal said that the need has increased to construct such models to analyse impact of our economic activities such as PRSP’s implementation, MDGs achievements and sectoral assessment of various economic factors.

The models, according to him, will do proper assessment of effect in policy changes and impact on the sectors such as taxation and expenditure policy, growth and poverty reduction.

Dr Khanal asked that CGE models be installed in NPC, MoICS and Nepal Rastra Bank (NRB) to pave a way for integration into Global Trade Analysis Project (GTAP) system.

Dr Sri Ram Raj Pandey, advisor of UNDP commented that such CGE and SAM models are necessary to study on how interventions are being made on national economic development initiatives of the country. “Such models also help us in analysing the impact,” he said.