Budget variation and welfare in Cameroon: a computable general equilibrium model approach

Abstract The objective of this paper is to determine the impact of a variation in government spending on the well-being of the population in Cameroon. We use the Computable General Equilibrium Model (CGEM) developed by Decaluwé et al., (2001) calibrated on the 2016 Social Accounting Matrix (SAM) for Cameroon. This SAM is constructed from the Resources and Uses Table (RUT) and national accounts data from the National Institute of Statistics (2017). The welfare is measured by the equivalent variation indicator. The results show that a 20% increase in public expenditure would contribute to improving the well-being of salaried households and capitalist households by 883.58 billion CFAF and 5.47 billion CFAF respectively. This improvement in well-being is achieved through a reduction in the current price of goods and services in the various sectors (0.76% for agriculture, 0.53% for industry, 0.76% for services and 0.57% for public services) on the one hand, and through an increase in household income on the other, whether they are salaried or capitalist earners.