They are based on a number of hypotheses; in particular, they assume that transactions occur at non-equilibrium prices, and prices remain fixed, owing to excess capacity; functional relationships are taken to be linear in the financial SAM column; and the models are essentially demand-driven, as supply-side is not a constraint on economic activities. Naturally, the first assumption implies that prices and wages do not move immediately and automatically to clear the market, and inferences are based on quantities; only activity levels may vary. The second assumption implies that the substitution between imports and domestic production in the commodity columns may not be possible, especially given that the production function follows Leontief specifications.

Despite these restrictions, fixed-price multiplier analyses have been used extensively to study the distribution of income (Roland-Holst and Sancho [1992]), and the short-term effects of fiscal policies (Whalley and Hillaire [1987]). More recently, they were used to assess the sources of growth and sectoral distribution of resources (Arndt, Jensen and Tarp [2000]). In this Section, we draw on these models to assess the functional and institutional distribution of income and growth, the effects on saving and production, financial assets and accumulation processes, following shocks on exogenous accounts.<sup>45</sup> We focus particularly on the growth and income effects of increased public investment and capital expenditures.

The growth and income effects following the shocks are measured on endogenous accounts and variables (see Annex V-A for endogenous accounts) considered as response. The variation in the income, and activities levels of these variables are explained by changes in the exogenous accounts, through multipliers. A practical use of these models in policy analysis requires a prior subdivision of all the real and financial sectors accounts of the SAM into two mutually exclusive classes of exogenous and endogenous accounts. In our attempt to infer on the functional and institutional distribution of income, saving, growth and the accumulation process, from the prototype financial SAM of the IMMPA framework, we identify 15 exogenous accounts subdivided into 3 exogenous current accounts, 3 exogenous capital accounts, and 9 exogenous changes in assets and liabilities accounts (see Annex V-B). These exogenous variables emphasize the government and rest-of-the world accounts. This reflects the nature of the shock, which simulates the short-run growth and income effects of increased public investment and capital expenditures following hypothetical reduction in the stock of debt and external debt services within the framework of the HIPC initiative. The choice of this scenario reflects the fact that Cameroon’s external debt is extremely high and it is believed that interest payments might have hampered its growth prospects.

The simulated growth and income effects of shocks on exogenous accounts are measured on the response of endogenous accounts. These endogenous accounts include the remuneration of factors (in the IMMPA classification, this includes unskilled rural labor, skilled and unskilled urban labor), production of economic agents, household income and income accruing to non financial companies, and changes in financial assets. Annex V provides the details of the multipliers matrix (Annex V-A focuses on the sub-set of endogenous accounts, and Annex V-B focuses on exogenous accounts). The linkage between exogenous and endogenous accounts is provided by a fixed-prices multipliers model in a functional form specified by the set of equations below.

> 45 Functional distribution of income records the division of income between production factors (wage and property income) and institutional distribution of income focuses on the spatial distribution of income, particularly urban/rural dimension, but also along a number of other institutional classifications.

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