Document Type

Article

Publication Date

1984

Abstract

The paper presents an economy wide framework for policy analysis focusing on structural adjustment in production and trade patterns. The framework, which is named SIAM2, is designed in order to allow the analyst to draw medium-run macroeconomic and distribution implications of alternative policies for structural adjustment. SIAH2 is a multi-sectoral, multi-household general equilibrium model of the Thai economy. It is used here to analyze the response of the economy to a drop in the world prices of oil and to compare two schemes of intervention on the rice market. The analysis shows that if one is concerned with external balance and foreign debt accumulation, it is preferable not to lower domestic energy prices with the drop in world prices. The adverse effect on income distribution is negligible. Comparing manipulations of the tax rate on exports of rice and a buying program in order to increase rice prices and farmers' incomes, the analysis points to the higher efficiency of reducing the export tax rate. The larger the elasticity of the world demand for Thai rice, the greater is the improvement in farmers' income.

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