Climate Change Impact and Structural Reforms in Kiribati
KIRIBATI
Appendix I. Model Input Parameters for Long-Term Growth
Calculations, (2021-2050)
Table 1. Kiribati: Model Input Parameters for Long-Term Growth Calculations, (2021-2050)
Model Description
The model uses a Cobb-Douglas production function Y=AKH (HL)1-a, where Y denotes real GDP, A technology, K capital stock, L work force, H
human capital and a capital-output elasticity (or capital income share), and an equation for capital accumulation Kt+1=Kt (1− 8)+It, where It
denotes investment and 8 is the rate of capital stock depreciation. This yields an equation of long-term growth, which can be expanded to
include demographic factors, so that
9y9A (1a) (gh + gw + 9N + gp) + (α / K/Y) I/Y - α S
This equation implies that GDP growth (gy) is the (weighted) sum of total factor productivity (gA), human capital (gh), demographic factors
(output per worker or labor productivity (gw) and growth in working age to population ratio (gw)), labor market participation (gp), the marginal
productivity of capital (a / K/Y) and the investment rate (I/Y), while controlling for the rate of capital depreciation (8).
The table below summarizes values for the model's parameters under different scenarios. When Kiribati data are not available, input values
are selected as the lower tenth percentile of the World Bank's low and middle-income country (LMIC) group (comprising 52 countries) in the
baseline scenario. Where appropriate, the comprehensive development scenario foresees a growth of Kiribati's input factors to achieve the
twenty-fifth LMIC percentile within a given horizon.
Model Type Inputs
General Model
Capital-output ratio
Depreciation rate
Labor share
Baseline (No change)
2.4
4.2%
39.7%
Comprehensive Development
2.4
4.2%
39.7%
Human capital growth
Labor market participation
Male
Female
External Debt/GDP
Net FDI/GDP
Population growth
0.75%, 1% by 2035
45%
50%
40%
21%
0.33%
1.50% by 2035
60%
65% by 2050
Working age to population
Poverty rate (headcount)
Threshold
Gini coefficient
Investment/GDP ratio:
Initial GDP per capita (2019)
Total Factor Productivity
Public vs Private Investments
Public investment share
Public investment ratio
Public capital-output ratio
Public depreciation rate
Private investment ratio
Private depreciation rate
Private capital-output ratio
Elasticity output to public capital
Efficiency of new public capital
1.30% 1.18% (2050)
60.3% 63.5% (2050)
30%
National poverty line
0.39
15%
US$ 1,615
-0.25% -0% by 2050
75%
11.25%
1.8
4%
3.75%
4.8%
0.6
0.10 (low)
60%
55% by 2050
25% by 2035
2.8% by 2040
same
same
30%
same
0.37 by 2035
20% by 2035
-0.25% -0.21% by 2050
75%
15% by 2050
1.8
4%
5% by 2035
4.8%
0.6
0.17 (default)
70% by 2050
Note: For total factor productivity, an alternative specification (using inputs on innovation, education, efficiency, infrastructure, and
institutions) is experimented. TFP growth would be slightly higher under the baseline, based on paths from peers in the region and
elsewhere, but similar under the development scenario.
INTERNATIONAL MONETARY FUND 29View entire presentation