Remittances and the Redistributive Policy in Ghana: A Computable General Equilibrium Approach
Journal Title: Review of Economics & Finance - Year 2016, Vol 6, Issue 2
Abstract
This paper numerically explores the distributive policy for improving both welfare and income inequality with increased remittances in Ghana within a computable general equilibrium (CGE) framework. Our simulation results show that the government can improve both welfare and inequality by using a government surplus generated by increased remittances without any additional revenue resources. If the government is concerned about inequality, then the surplus for more direct transfers to the rural household results in the best outcome. On the other hand, if the government is concerned only about welfare, then a policy to use the surplus for more government spending on education or health achieves the largest welfare gain through its direct demand effect. While the Ghanaian economy can enjoy the largest welfare gain as a whole when the surplus is used for more government spending on education or health, the increased welfare gain will be more distributed to the government sector in comparison with the case when the surplus is used for more direct transfers to the rural household.
Authors and Affiliations
Isaac Dadson, Ryuta Ray Kato
Keywords
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