# **Table of Contents**

|1. Introduction..................................................................................................................... 2|
|---|
|2. Simulation Models of the Size Distribution of Income .................................................. 7|
|2.1. The Lorenz Curve Approach ................................................................................... 8|
|POVCAL..................................................................................................................... 8<br>|
|SimSIP Poverty......................................................................................................... 11|
|2.2. Unit-Record-Based Approaches ............................................................................ 13|
|PovStat...................................................................................................................... 13<br>|
|The Envelope Model................................................................................................. 16|
|The Household Income and Occupational Choice Model........................................ 19|
|3. Embedding Distributional Mechanisms within a General Equilibrium Model ............ 23|
|3.1. The Logic of General Equilibrium Modeling........................................................ 23|
|What is a General Equilibrium Model? .................................................................... 23<br>|
|Empirical Implementation ........................................................................................ 24|
|3.2. Modeling Distributional Mechanisms.................................................................... 28|
|4. Linking a Macroeconomic Framework to a Model of Income Distribution................. 31|
|4.1. The 123PRSP Model ............................................................................................. 32|
|The Financial Programming Module........................................................................ 33|
|The Growth Module.................................................................................................. 35|
|The Two-Sector General Equilibrium Model........................................................... 36|
|The Micro-Layer....................................................................................................... 39|
|4.2. The PAMS Framework.......................................................................................... 42|
|The RMSM-X Module.............................................................................................. 42|
|The Meso-Module..................................................................................................... 44|
|The Poverty Simulator.............................................................................................. 46|
|Operational Support.................................................................................................. 47|
|Reduced-Form Implementation ................................................................................ 47|
|4.3. A Macro-Micro Simulation Model for Brazil........................................................ 49|
|The IS-LM Model..................................................................................................... 49|
|Linkage Variables..................................................................................................... 50|
|4.4. The IMMPA Framework ....................................................................................... 50|
|The Labor Market ..................................................................................................... 51|
|The Financial Sector ................................................................................................. 52|
|Public Expenditure.................................................................................................... 52|
|Distributional Analysis ............................................................................................. 52|
|5. Concluding Remarks..................................................................................................... 54|
|Annex................................................................................................................................ 56|
|Notes ................................................................................................................................. 65|
|References......................................................................................................................... 67|

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