Purchasing power parities and the Dollar-A-Day approach: An unstable relationship

Michail Moatsos and Achillefs Lazopoulos

Economics Letters, 2021, vol. 206, issue C

Abstract: We show that the Dollar-A-Day methodology in global poverty measurement provides inconsistent International Poverty Line (iPL) solutions when a complete set of consistency criteria in the iPL definition is used. This article illustrates that minor fluctuations in purchasing power parity exchange rates can yield inconsistent iPLs. We find a rate of inconsistency of 46.1% and we conclude that this is a worrisome attribute of the method.

Keywords: Global poverty; PPP; Error; Dollar-A-Day; Inconsistency; Monte Carlo (search for similar items in EconPapers)
JEL-codes: I32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:206:y:2021:i:c:s0165176521002512

DOI: 10.1016/j.econlet.2021.109974

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