Macroeconomic Performance and Poverty Reduction

Anne Epaulard

No 2003/072, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; d ln; economic growth; Poverty; Growth; Macroeconomic Policies; Income Distribution; elasticity of poverty; elasticity of the poverty rate; efficiency ratio; day poverty rate; day headcount poverty rate; absolute value; inflation rate; Poverty reduction; Personal income; Poverty reduction strategy; Africa; Middle East; South Asia; East Asia; Asia and Pacific (search for similar items in EconPapers)
Pages: 36
Date: 2003-04-01
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Citations: View citations in EconPapers (49)

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