Modeling Public Policies in Latin America and the Caribbean

In an increasingly integrated world where the pace of change is accelerating, policy decisions need to be taken with little hesitation. However, their development effectiveness requires that they are also based on solid analytical foundations.

The negotiation of an open rules-based global trading system, the eradication of poverty and inequality, and the adaptation to climate change are examples of complex policies featuring multiple direct and indirect effects, as well as economic, social and environmental ramifications that are difficult to assess in the absence of sophisticated analytical instruments.

Given the existence of information asymmetries and coordination failures, multilateral development institutions have an opportunity to support their member countries in the assessment of policies that require complex background analysis, particularly when their effects spill over beyond the border of any given country. The development and dissemination of cutting-edge knowledge and analytical toolkits should therefore be pursued as regional public goods.

In this context the Inter-American Development Bank (IDB) and the Economic Commission for Latin America and the Caribbean (ECLAC) have formed a partnership to promote a regional network of computable general equilibrium (CGE) modellers that facilitates the exchange of analytical findings, techniques and data, with the ultimate objective of better serving policymakers in policy formulation.

The regional meetings of CGE modellers, held annually in a different country of the region, have been instrumental in promoting intraregional transfer of analytical technologies and in bringing the region closer to international best practices. As an outcome of this effort, the Global Trade Analysis Project (GTAP) selected ECLAC and IDB to host the 12th Annual Conference on Global Economic Analysis, which provided an opportunity to showcase globally the work being done regionally.

This book includes a selection of studies discussed in past annual regional meetings on modelling. They deal with issues such as trade policy, regional integration, trade in services, fiscal policy, the impact of food price surges and climate change; are based on comparable methodologies; and shed light on the implications of crucial policy alternatives that Latin American regional policymakers are currently facing.

With this publication, ECLAC and IDB hope to disseminate the studies broadly among policymakers and to encourage new generations of modellers to further analytical work in this area. In doing so both organizations reaffirm their commitment to support this line of research so that stakeholders can take better informed policy decisions.