Assessing the Impact of the Global Financial and Economic Crisis in Developing Countries: the Case of Uruguay

Carmen Estrades and Cecilia Llambi

Working Papers MPIA from PEP-MPIA

Abstract: This paper uses a static computable general equilibrium model (CGE) linked to a microsimulation model to analyze how the global crisis and some adopted policy responses may have affected the Uruguayan economy. The focus is on the trade channel and foreign capital flows, since they are the most important mechanisms through which the global crisis affected the Uruguayan economy. The crisis had a strong impact on exports and fixed investment. Poorest households would be the most affected, as they face a stronger reduction in real wages and a rise in unemployment. We find a negative impact on extreme poverty, but not on moderate poverty, as households near the poverty line would benefit from the fall in some consumer prices. A policy based in increasing current public consumption does moderately counteract some negative impacts of the crisis, but benefits mainly skilled workers, and does not act directly towards the most affected.

Keywords: Global economic crisis; trade shock; fiscal response; Uruguay; unemployment (search for similar items in EconPapers)
JEL-codes: D58 G01 H50 I32 J68 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cis, nep-cmp, nep-dev and nep-lam
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:mpiacr:2011-16

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