PardeeCenterDU / IFs-Issues-Tracking

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MFPCORS and IGDPR #236

Open caleb-petry opened 1 year ago

caleb-petry commented 1 year ago

Description: When IGDPR is used to calculate MFPCORS in the first year, IGDPR is used as the target for all sectors. This leads to lower growth than expected due to agriculture and energy.

With agriculture and energy being computed in their submodules, this led to lower growth than expected in high-growth lower income economies with substantial agricultural sectors (like China) during the validation work.

Numeric Example: IGDPR = 10 Agricultural Growth Rate = 3 Energy Growth Rate = 6 All Sectoral Shares = 1/6

Calculated Growth Rate = (3 + 6 + 10 + 10 + 10 + 10) / 6 = 8.1

"Ideal" Growth Rates = (3 + 6 + (4 * 10x)) /6 = 10; x = 1.275

Existing Processes: "First Year Compute Sectoral Growth Rates", adjusts sectoral growth rates to account for slower agricultural growth. For low-income countries, twice TGRYL. Else, just TGRYL.

"CorrectReduction", shifts the correction factor from agricultural sectors to others.

Temporary Workaround:

  1. Calculate VADD for each sector, sum for computed GDP
  2. Calculate expected GDP based on IGDPR
  3. Compare computed and expected GDP
  4. Adjust sectoral correction factors for sectors 3 through 6 (see "Ideal" Growth Rate in Numeric Example)