Nicaragua : Structural Adjustment Policy Analysis in the Nineties

Three of the most relevant aspects of structural adjustment are presented in this paper: exchange policies, tariff policies, and fiscal policies. They are evaluated with a Computable General Equilibrium (CGE) model. The model is used first to assess the exchange rate as the most relevant macroeconomic variable both for inflation control and for the promotion of exports. Secondly, the CGE considers how trade liberalization sustained on Ricardian principles of comparative advantages within a framework of trade integration agreements. Finally, the CGE analyzes public expenditure contraction as a central element in the new role the state has in the economy. The model is based on a Social Accounting Matrix built for 1991, a key year for these transformations