Zimbabwe: adjustment, macro-economics and sustainability: CGE results for Zimbabwe
Mabugu, Ramos E.
MetadataShow full item record
Within the framework of a small, macroeconomic general equilibrium model of the Zimbabwean economy, comparative statics are used to assess alternative ways of macroeconomic management since independence. The fiscally expansive policies of the 1980s are shown to generate growth which, however, is unsustainable on fiscal, equity and balance of payments criteria. The result of a full implementation of structural adjustment policies is a 10 percent higher GDP level compared to the baseline scenario. The dismal growth performance in the 1990s is attributed to five factors: deteriorating balance of payments position, lack of investment, lack of fiscal reform, recurring negative re distributions and unwillingness or inability to view the reform policies as a coherent package deal. Income distribution differs only marginally across the two diametrically opposed regimes, while the fiscal deficit is substantially higher under policies of the 1980s.