Multisector Models and Sectorial Projections

Input - output model or interindustry model

– formal model dividing the economy into
sectors and tracing the flow of interindustry
purchase (inputs) and sales (outputs)
Input – output extended in 2 ways

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o SAM models where data from national

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accounts, BOP, and flow of funds databases is

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supplemented which household survey data.

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o CGE Models where utility and production
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function are estimated and impacts of policies
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are simulated
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Computing Shadow Prices and Social Discount

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Rates - calculating the social rate of discount or

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social time preferences

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B - expected benefit at time t

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C – expected cost at time t

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r – social rate of discount used

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 Choosing Projects: Some Decision Criteria
1.NVP Rule
2.Compare the internal rate of return with an
interest rate

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Government failure and preferences

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for market over planning:

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 Problems of Plan Implementation and
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Plan Failure
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 Theory versus Practice

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 Government failure
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 Deficiencies in Plans and Their

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Implementation
 Insufficient and Unreliable Data
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Th

 Unanticipated Economic Disturbances,

External and Internal
sh

 Institutional Weaknesses
 Lack of Political Will

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  Conflict, Post conflict, and Fragile States

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er as
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o.
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o
aC s
vi y re
ed d
ar stu
is
Th
sh

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