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GTAP Resource #4767

"General Equilibrium Effects of Epidemics: An Analysis of the Impact of Ebola on Liberia"
by Lofgren, Hans

In Liberia and other countries in West Africa, the Ebola epidemic has brought about severe losses in human lives, accompanied by disruptions to production and trade with a negative impact on living standards. As the local and potentially global threat of the epidemic became evident in the early fall of 2014, local and international policymakers needed rapid access to information that could guide policy actions in the 2014 and 2015.

This paper assesses the impact on Liberia’s economy from three alternative Ebola scenarios: a central case underpinned by moderately effective policies, a high case with an inadequate policy response, and a low case with a high degree of policy effectiveness. The assessment is based on simulations with MAMS, a CGE model developed by the World Bank for dynamic policy analysis of developing countries. The scenarios are captured via the introduction of shocks related to population by age group (adjusted for Ebola deaths), removal of labor and other factors from employment (reflecting restrictions on movement), reduced FDI, increased transactions costs for domestic and foreign grade, and higher foreign grants.

The main advantage of using a CGE model in this context is that, when considering the repercussions of the virus, the model imposes basic economic mechanisms, including markets with flexible prices and the constraints and linkages that are important in any economy: employment of labor and capital and other factors is limited to what is available; the spending of the nation as a whole and its different agents (the government, firms and households) must be fully financed (by some combination of current incomes, grants, and net borrowing, some of which may come from abroad).

This analysis assesses the effects of Ebola on country-level macro, sectoral, welfare, and poverty indicators. In sum, a comparison between the different scenarios, representing different degrees of success in containing the epidemic, demonstrate the ...

Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Not published
Date: 2015
Created: Lofgren, H. (4/15/2015)
Updated: Batta, G. (5/5/2015)
Visits: 578
- Calibration and parameter estimation
- Dynamic modeling
- Health
- Africa (West)

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