Constructing Indonesian Social Accounting Matrix for Distributional Analysis in the CGE Modelling Framework

The distributional impact of policies analyzed in the CGE modelling framework have been constrained in part by the absence of a Social Accounting Matrix (SAM) with disaggregated households. Since Indonesian official SAM does not distinguish households by income or expenditure size, it has prevented accurate assesment for the distributional impact, such as calculation of inequality or poverty incidence. This paper describes how the Indonesian SAM for the year 2003, with 181 industries, 181 commodities, and 200 households (100 urban and 100 rural households grouped by expenditure per capita centiles) was constructed. The SAM (with the size of 768x768 accounts) constitutes the the most disaggregated SAM for Indonesia at both the sectoral and household level. SAM Construction is an essential part of CGE modeling, and this documentation provides greater transparency as well as replicability for further improvement.