(MEEGA by its Spanish acronym) was developed, which includes households,
government, the external sector, and industry based on the 2001 SAM. This model
was designed to raise the level of discussion about the impact of economic policies in
the country. Its main application evaluated the possible effects on the Ecuadorian
economy of the Free Trade Agreement with the USA (Pérez and Acosta 2005).
Based on the structure of the MEEGA model, in 2007 the Model of Tributary
Applied General Equilibrium Model for Ecuador (MEGAT by its Spanish acronym)
was developed in order to conduct a comprehensive analysis of tax policies, taking
into account the evasion of the value added tax (VAT) and income tax (IRC)
(Ramirez 2007). In 2010 the model for evaluating exogenous shocks, economic
and social protection (MACEPES) was developed. Based on this model, studies
were conducted for seven Latin American countries, including Ecuador (Cicowiez
2012; Cicowiez and Sánchez 2010). More recently, Castro et al. (2018) developed
a General Equilibrium Model for Ecuador to asses the socio economic impacts due to
refinery matrix change.
3.4.3 Social Accounting Matrix
The social accounting matrix (SAM) is defined as the matrix representation of the
circular flow of income of a socio-economic system in a given period (BCE 2017a).
It has three main objectives: “(1) to organize the economic and social information of
a country in a given period; (2) to provide a synoptic view of the flows of receipts
and payments in an economic system; and (3) to form a statistical basis to build
models of the economic system to simulate the socioeconomic impact of policies”
(Giovanni Bellu 2012).
It is a complete and disaggregated data system that is one of the fundamental
elements in economic modelling and descriptive socio-economic analysis. It is
complete and disaggregated because, due to its construction process, it is established
under the “Top-Down” methodology, where each element at the macro level
represents a transaction within the same economic system involving different agents
such as households, firms, government, and the rest of the world; and the micro level
explains the disaggregation of different transactions, providing an analytical and
mathematical description to obtain the macro SAM (BCE 2017b). This matrix is
used for economic modelling, as it is the numerical basis for calibrating different
economic models, such as general equilibrium models (Ramajo et al. 1998), and for
socio-economic analysis, as it is a tool for analyzing and applying policies and
planning, since it covers the economic and social structure of an entire country.
The SAM is built under the guidelines established by the United Nations System
of National Accounts. It has a square matrix representation whose structure is fed by
the transactions of different accounts, organized in row (income) and column
(expenditure), or in its representation i and j, which represent the interconnections
between the different economic agents (BCE 2017b). The accounts involved in the
SAM are goods and services (origin and destination of final goods), production
activities, factors of production, economic agents, capital account, and the external
or so-called rest of the world account (Ramajo et al. 1998).
48
D. Ortega-Pacheco et al.
government, the external sector, and industry based on the 2001 SAM. This model
was designed to raise the level of discussion about the impact of economic policies in
the country. Its main application evaluated the possible effects on the Ecuadorian
economy of the Free Trade Agreement with the USA (Pérez and Acosta 2005).
Based on the structure of the MEEGA model, in 2007 the Model of Tributary
Applied General Equilibrium Model for Ecuador (MEGAT by its Spanish acronym)
was developed in order to conduct a comprehensive analysis of tax policies, taking
into account the evasion of the value added tax (VAT) and income tax (IRC)
(Ramirez 2007). In 2010 the model for evaluating exogenous shocks, economic
and social protection (MACEPES) was developed. Based on this model, studies
were conducted for seven Latin American countries, including Ecuador (Cicowiez
2012; Cicowiez and Sánchez 2010). More recently, Castro et al. (2018) developed
a General Equilibrium Model for Ecuador to asses the socio economic impacts due to
refinery matrix change.
3.4.3 Social Accounting Matrix
The social accounting matrix (SAM) is defined as the matrix representation of the
circular flow of income of a socio-economic system in a given period (BCE 2017a).
It has three main objectives: “(1) to organize the economic and social information of
a country in a given period; (2) to provide a synoptic view of the flows of receipts
and payments in an economic system; and (3) to form a statistical basis to build
models of the economic system to simulate the socioeconomic impact of policies”
(Giovanni Bellu 2012).
It is a complete and disaggregated data system that is one of the fundamental
elements in economic modelling and descriptive socio-economic analysis. It is
complete and disaggregated because, due to its construction process, it is established
under the “Top-Down” methodology, where each element at the macro level
represents a transaction within the same economic system involving different agents
such as households, firms, government, and the rest of the world; and the micro level
explains the disaggregation of different transactions, providing an analytical and
mathematical description to obtain the macro SAM (BCE 2017b). This matrix is
used for economic modelling, as it is the numerical basis for calibrating different
economic models, such as general equilibrium models (Ramajo et al. 1998), and for
socio-economic analysis, as it is a tool for analyzing and applying policies and
planning, since it covers the economic and social structure of an entire country.
The SAM is built under the guidelines established by the United Nations System
of National Accounts. It has a square matrix representation whose structure is fed by
the transactions of different accounts, organized in row (income) and column
(expenditure), or in its representation i and j, which represent the interconnections
between the different economic agents (BCE 2017b). The accounts involved in the
SAM are goods and services (origin and destination of final goods), production
activities, factors of production, economic agents, capital account, and the external
or so-called rest of the world account (Ramajo et al. 1998).
48
D. Ortega-Pacheco et al.