The Macroeconomics of Zimbabwe in the 1980s: a CGE-Model Analysis1

Macroeconomic development in Zimbabwe is analyzed in terms of sectoral balance and distributional shifts. The economic performance during the period 1981–88 is evaluated with a five sector CGE model assuming endogenous import rationing. A foreign exchange constraint links the exportables sector performance and the rationing of imported intermediates to the import-dependent construction and importables sectors. Agricultural shocks and import compression policies are shown to be the major explanatory factors for the fluctuation and stagnation of economic growth. In counterfactual experiments, expansionary devaluation and contractionary investment expansion are the result of the foreign exchange constraint.