The World Bank's Development Prospects Group has developed a tool for economy-wide, country-level analysis of medium- and long-run development policies, including strategies for reducing poverty and achieving the Millennium Development Goals (MDGs). The tool – named MAMS (Maquette for MDG Simulations) – is a dynamic Computable General Equilibrium model that has been extended to cover the generation of outcomes in terms of growth, MDGs, and the educational make-up of the labor force, as well as the interaction of these outcomes with other aspects of economic performance.
The government policies that are considered include:
- spending: its level and allocation across different areas (including education, health, and infrastructure);
- financing: policies for taxation, domestic and foreign borrowing, and foreign aid.
Economic performance is measured by the evolution of:
- poverty and other MDG targets;
- macro indicators: GDP (split into private and government consumption and investment; exports; imports); the composition of the government budget, the balance of payments, and the savings-investment balance; total factor productivity; and domestic and foreign debt stocks.
- sectoral structure of production, employment, incomes, and trade;
- the labor market: unemployment; educational composition of the labor force.
MAMS is a flexible tool that can be run in different versions that differ in data needs. For example, for analysis of macro issues, it is sufficient to use a version with minimal data needs; analysis of MDG strategies requires a version with additional sectoral disaggregation and a more detailed database.
This program note, prepared by Hans Lofgren, provides background information on the program.
We gratefully acknowledge support for this work from the Knowledge for Change Program Trust Fund through the projects "Poverty reduction and human development: Analysis of alternative strategies within an economywide framework" and “Micro simulations of poverty reduction and service delivery in a user-friendly, economy-wide framework.”