Abstract

Askar Khater*, Murad Hegazy and Ali Saber Tobar

This paper develops a four-sector numerical simulation model of economic growth in Palestine which permits the calculation of macroeconomic growth multipliers resulting from income shock to agriculture, services, manufacture and non-manufacture. The resulting multipliers are 1.53 for agriculture, 1.63 for services, 1.52 for manufacture and 1.30 for non-manufacture. An income shock to agriculture is clearly the most progressive choice, indicating the need to highlight agricultural development in growth strategy for Palestine. Yet the simulation results further indicate that going imposes relatively little trade off against total benefit. While a $1 Service sector income shock generates $0.63 in indirect benefit, a $1 agricultural income shock still generates $0.53 in indirect gainsa somewhat smaller benefit, but one likely to make the greatest possible impact on poverty reduction.