MIBRA-USP, An Interregional Applied General Equilibrium Model for the Brazilian Economy

Abstract

On the external side Brazil has experienced since the beginning of the 1990’s an opening process of its economy in a world environment were there have been a wide process of block formation (European Union, Nafta, Mercosur, etc.), on the internal side the Brazilian Real Plan in 1994 has started a period o relative stabilization in the economy that after more than two decades of high inflation has finally brought it under control. The above factors seem to have contributed to structural changes in Brazilian economy. These structural changes were not equally distributed among the sectors and the regions in the Brazilian economy. As an instrument that can be used to evaluate the impact of the economic policies over the regional development in the Brazilian economy, this work presents an interregional Applied General Equilibrium (AGE) model, MIBRA-USP, constructed for the 16 most important sectors in the economy as well as for the 5 Brazilian macro-regions (North, Northeast, Central West, Southeast, and South), calibrated for the year of 1995. This model follows in the tradition of the MONASH-MRF (Multiregional Multisectoral Model of Australian Economy) constructed for the Australian economy and as such the model is solved using the GEMPACK software and their solutions are giving in growth rates. This model is a development over two other previous AGE models, in the Australian tradition, constructed for the Brazilian economy: a) the PAPA model (Guilhoto, 1995) that is a national model with a data base in 1980; and b) the B-MARIA model (Haddad, 1998), an interregional model consisting of 3 regions (North, Northeast, and Rest of the Economy) and calibrated for 1985. The simulations conducted with the MIBRA-USP model were chosen in a way to study how the regions and sectors in the Brazilian economy would react to different sets of economic policies.