This chapter presents findings from five sets of experiments carried out using our village CGE models. They explore the villagewide and village-townwide impacts of changes in output prices and product markets, technologies and ecologies, income transfers, labor markets, and international economic environments (exchange rates). For each experiment, we first explain how the experiment was carried out using the village CGE, and we then examine the effects of the policy, market, or environmental change on production, factor demands and prices, the level and distribution of household-farm incomes, and expenditure linkages outside the village. The experiments are useful for understanding the economic structure of our five villages and the villagewide implications of policy, market, or environment-induced changes. We believe they also provide insight into the likely effectiveness of alternative policies at achieving specific development goals.

The total impact of an exogenous shock on a village variable involves both direct and indirect effects. The indirect effects are conveyed by village prices and shadow prices. For example, our first experiment simulates the villagewide impact of an increase in the (exogenous) staple price. The direct effects in this experiment include an increase in staple prices for consumers (thereby reducing staple consumption) and an increase in the marginal value product (i.e., profitability) of labor and other factors in staple production. In combination, these two direct effects increase the supply and reduce the demand for staples, pushing up the marketed surplus of staples.