The inflation-poverty nexus: evidence from a cross-country approach

Martin Trombetta (), Joaquín Waldman () and Lautaro Souto ()
Additional contact information
Martin Trombetta: Universidad de Buenos Aires. Facultad de Ciencias Económicas. Instituto Interdisciplinario de Economía Política (IIEP UBA–CONICET). Buenos Aires, Argentina.
Joaquín Waldman: Universidad de Buenos Aires. Facultad de Ciencias Económicas. Instituto Interdisciplinario de Economía Política (IIEP UBA–CONICET). Buenos Aires, Argentina.
Lautaro Souto: Universidad de Buenos Aires. Facultad de Ciencias Económicas. Instituto Interdisciplinario de Economía Política (IIEP UBA–CONICET). Buenos Aires, Argentina.

No 2026-116, Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) from Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET)

Abstract: We study the effect of inflation on poverty in a large panel dataset of 160 countries observed from 1970 to 2024. We estimate two-way fixed effects models that control for per capita GDP and calculate the sensitivity of internationally harmonized poverty measures (using different poverty lines) to the inflation rate. Our results point to a statistically significant positive impact of inflation on poverty, but only when relatively high poverty lines are used. Heterogeneity analysis reveals that the size of this effect is positively associated to country income level. Furthermore, unconditional quantile regressions suggest that the effect is larger in the second quartile of the international poverty rate distribution, implying the link is particularly strong for upper-middle income countries (notably, Latin American economies). Our findings replicate in a subsample of disinflation episodes. These results contribute to the relevant ongoing debate on the consequences of inflation and disinflation, suggesting a rationale for the political popularity boost usually associated to successful disinflations.

Keywords: Inflation; Poverty; Distribution; Cross-country; Two-way fixed effects; Unconditional quantile regressions (search for similar items in EconPapers)
JEL-codes: E31 I32 O11 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2026-03
New Economics Papers: this item is included in nep-fdg and nep-mon
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ojs.economicas.uba.ar/DT-IIEP/issue/view/561/221 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ake:iiepdt:2026-116

Access Statistics for this paper

More papers in Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) from Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) Contact information at EDIRC.
Bibliographic data for series maintained by IIEP UBA-CONICET ().