Economic growth and contraction and their impact on the poor

Brett Inder

No 3/04, Monash Econometrics and Business Statistics Working Papers from Monash University, Department of Econometrics and Business Statistics

Abstract: This paper considers the relationship between growth in real per capita GDP and the growth in real per capita GDP of the poorest 20% of a country. It uses the data set compiled by Dollar and Kraay (2002), but come to very different conclusions. We argue that if the purpose is to answer questions about the impact of growth on the poor, models are best estimated in growth rates. The empirical results show that growth's impact on the poor occurs in two episodes. First, in periods of sustained economic slowdown (negative growth over a period of at least 5 years), the poor clearly suffer more than the average. In contrast, where economies are growing, the poor do not benefit as much as the average. We also find that the poor benefit from growth less in periods of high inflation, and in countries with low average income.

Keywords: Economic Growth; Growth and Inequality; Economic Contraction; Inflation and Growth. (search for similar items in EconPapers)
JEL-codes: C33 O11 O40 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2004-02
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (1)

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