Name: Macrostructural Standalone Model for Sierra Leone
Type: DSGE
Institution: World Bank
Description: The macrostructural model estimates the short- and long-run impacts of climate change, as well as sectoral impacts, climate shocks, welfare impacts, and impacts on other macroeconomic indicators such as consumption.
Questions to be answered/variables considered: Variables considered include climate variables and macroeconomic variables across the real, fiscal, monetary, and external sectors. Model coverage corresponds to that of the Sierra Leone Integrated Macroeconomic Model (SLIMM) previously developed by the IMF, which covers all economic sectors and their links. Transition risks from regulations, technology, and climate-related taxation that could impact macroeconomic indicators such as GDP, investment, government budget, inflation, and imports and exports over time are also considered.
Strengths:
- The model can estimate the short- and long-term impacts of climate change on the economy.
- It is sector-specific and captures links in the economy.
Development/lessons/challenges:
- The model is the first macrostructural model for Sierra Leone to include climate change variables, and only five days of training were allocated by the World Bank, which was not sufficient for understanding such a complex model in detail.
- The MoF in Sierra Leone was not involved in the model’s development, and thus its formulae and underlying assumptions are not well understood. This means the MoF cannot make necessary adjustments in the future.
- Given the lack of local understanding of this model, an additional, locally built model is desired by the MoF, incorporating assumptions that reflect the specific circumstances of Sierra Leone. The idea is for development partners to provide Sierra Leone with international consultants who would work with local consultants and staff to develop such a model.