Abstract
This article constructs a computable general equilibrium model calibrated to Pakistan’s social accounting matrix for 2010–2011 to examine the household and macroeconomic effects of an unconditional cash transfer—the Ehsaas Emergency Cash programme—during the COVID-19 pandemic. Simulation results find the programme to be Pareto improving by raising real incomes and consumption for all household types. However, it is also found that the cash transfer served to reallocate resources between sectors, reduce national income and increase the government budget deficit. Thus, despite the welfare gains, the outcomes on Pakistan’s fiscal and macroeconomic indicators suggest that enthusiasm for the programme’s continuation needs to be tempered. Instead, the programme may be better considered for inclusion as an automatic stabilizer in fiscal and social policy planning than as an additional component of social protection in Pakistan. A similar caution extends to other emerging economies facing concerns of rising public debt.
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