Macroeconomic Performance and Poverty Reduction, Issues 2003-2072
This paper investigates the link between macroeconomic performance and the change in the poverty rate among 47 episodes of growth and 52 episodes of economic downturn in developing and transition economies. We show that, on average, (i) the greater the inequality, the lower the elasticity of poverty to growth, and the higher the mean income, the higher the elasticity; (ii) the country-specific elasticity is identical for episodes of economic growth and for episodes of economic downturn; and (iii) higher growth does not bring diminishing returns to poverty reduction. Moreover, we show that very high inflation is associated with a higher elasticity of the poverty rate to economic downturn, but at lower inflation, there is no relationship between inflation and the elasticity of the poverty rate to growth or recession. Trade openness and changes in the terms of trade explain part of the elasticity of the poverty rate to economic downturn.
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Level of Development Income Distribution and the Elasticity of the Poverty Rate
Looking for ProPoor Macroeconomic Policies
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$2 a day absolute value Actual and Neutral annualized change apparent elasticities average Belsley capita consumption consumption or income control variables corruption countries day headcount poverty day poverty line day poverty rate distributional neutral elasticity dln(c dummies are zero econometric estimation econometric results efficient at reducing elasticity of poverty Endogenous variable F test Gini coefficient given in parenthesis growth and poverty growth rate growth reduces poverty headcount poverty rate heteroskedastic-consistent standard errors Human Development Indicators income distribution inequality influential in regression level of development link between growth ln(C ln(l ln(Q macroeconomic mean income mean per capita null hypothesis observations detected openness to trade ordinary least squares percent growth poverty rate headcount poverty reduction poverty to growth rate to economic rate to growth regional dummies regression omitting regression reported reported in column robustness sample standard errors given survey mean terms of trade transition economies Wald test Welsch test World Bank