Economic Growth and Income Distribution: Linking Macro-economic Models with Household Survey Data at the Global Level

The recent literature has seen an increase in the number of macro-micro applications, where macroeconomic models are in some ways linked to household survey data in order to assess the income distribution consequences of macro policies. The applications vary from relatively simple micro-accounting exercises to complex micro-simulation models to a full integration of a micro module within a macro model. However, all of these applications have so far been undertaken at a single-country or regional level. In contrast, our approach—the Global Income Distribution Dynamics (GIDD) methodology— establishes consistency between a macroeconomic model and household survey data at the global level. The GIDD is a framework for ex-ante analyses of the distribution and poverty effects of changes in macroeconomic policy and/or trends in global markets. It complements a global CGE analysis with global micro-simulations based on standardized household surveys. In this paper, we develop the methodological approach of the GIDD and illustrate its application with a series of forward-looking global scenarios. The forward-looking macro