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Abstract
This paper opens a new field in quantitative policy analysis by developing a methodology
for the construction and simulation of computable non-separable household models. Non-separability
originates in market failures and in a binding credit constraint, both of which transform the products and
factors affected into non-tradeables. The methodology is applied to a simulation of the impact on Moroccan
peasant households of the new pricing rules for cereals introduced by structural adjustment. The results
show that the elasticity of supply of tradeables is hampered by the presence of nontradeable factors in the
household; that small farmers are pushed on to the labour market as a strategy to relax a credit
constraint; and that technological change should be directed at enhancing the productivity of nontradeables
to increase the elasticity of supply response of tradeables. Further, a rising price for cereals
shifts the farm economy from animals to crops. Nevertheless, as the price of trade able animal forage rises,
child labour used for herding in the commons is substituted for this forage, and children's work load
increases. The expected consequence is increased school absenteeism and more overgrazing in the
commons, two historical curses of Moroccan underdevelopment.