defined as the supply of capital in the last period plus investment in new capital in the last period minus depreciation. To generate the exogenous path for GDP and investment, total factor productivity and savings rates are determined endogenously in each period. After generating the baseline, GDP and investment become endogenous, while total factor productivity (TFP) and savings rates are exogenous, set at the levels determined in the baseline. In the AMR scenarios, GDP and investment respond to the policy shocks, as would be expected.<sup>7</sup> Against the baseline economic projections of no AMR, the AMR-induced shocks are introduced. Since both the baseline and what-if counterfactual or AMR simulations contain the same underlying economic projections, their differences isolate the effects of the critical factors that define the AMR impact of each scenario. The analysis is based on the differences between the AMR scenarios and the baseline for selected key variables. The economic impact of AMR occurs primarily through four channels: changes in the labor supply, changes in TFP in the livestock sector, increases in government public spending on health care, and an increase in trade and transport margins due to a “fear factor.” The rise in societal health care cost due to AMR is first reflected as an elevation in public spending. However, the public finance rule for clearing the fiscal balance means that they are ultimately paid for by households through a direct tax, in effect becoming out-of-pocket expenditures of households. Through this modeling mechanism, the netof-tax income falls, reducing every consumption items in the household budget and causing impoverishing effects on households. As the net-of-tax income falls, so does the level of household savings for financing its contributions to total investment. These AMR-induced shocks give rise to economy-wide interactions within and between regions and over time, resulting in changes in production, consumption, investment trade, output prices, and factor wages. We summarize these outcomes by showing how selected macroeconomic indicators differ from the baseline.

# **_The GIDD model_**

To look at poverty implications of AMR, we use the results of the GLOBE_DYN as input to the Global Income Distribution Dynamics (GIDD) microsimulation model. GIDD’s extensive coverage of microdata from household surveys permits the ex-ante investigation of issues not easily tractable with other methods, especially across countries. GIDD follows the tradition of microsimulation analysis of Bourguignon and Bussolo (2013), which extends the single-country macro-micro framework in Bourguignon and Savard (2008) to a global setting.<sup>8</sup> Recently, it was updated to provide a consistent treatment of labor and its skill composition based on educational attainment of household members for 104 countries to model the income distribution and poverty

> 7 This procedure assures that, if the model were resolved with these new assumptions and without any additional policy shock, the baseline results would be replicated exactly. That is, the fact that the results for the AMR scenarios deviate from the baseline reflects the policy shocks, not the change in assumptions.

> 8 For more details, see Bourguignon and Bussolo (2013), Bussolo et al. (2010), and Cruz et al. (2017).

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