CoPS/IMPACT Working Paper Number G-233

Title: Modelling the impact of HIV/AIDS: A literature review

Author: Louise Roos


A number of methods and models have been used to analyse the economic impacts of HIV/AIDS. The overall consensus is that depending on the severity of the epidemic, HIV/AIDS holds serious negative consequences for economic growth and economic welfare. The aim of this paper is to give a broad overview of the methodologies used in analysing the economic impact of HIV/AIDS on various countries, including South Africa. The literature review is structured by method of analysis. For each method, selected papers are briefly described.

This paper is set out as follows: Section 1 describes studies using econometric estimation. This method is useful in cross-country analysis and allows for the impact of the disease to be compared internationally. Section.2 describes studies applying country-specific macroeconometric models to examine the impact of HIV/AIDS. Section 3 describes the use of aggregate growth models. These models extend the Solow model, allowing HIV/AIDS to be captured via the reduction in employment and population growth. These country-specific models are useful in analysing the impact of HIV/AIDS on economic growth and per capita income. Section 4 describes the use of country-specific CGE models in the analysis of HIV/AIDS. Section 5 reviews other methods used for analysing the impact of HIV/AIDS on an economy. These methods include overlapping-generations models, demographic models and sector-specific analysis. The paper ends with concluding remarks.

JEL classification: I190, O55.

Keywords: HIV/AIDS, Africa

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