Four Scenarios of Poverty Reduction and the Role of Economic Policy

Desire Avom, Fabrizio Carmignani () and Abdur Chowdhury ()
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Desire Avom: Universite’ de Yaounde’ II

No 3109, MRG Discussion Paper Series from School of Economics, University of Queensland, Australia

Abstract: The most favourable scenario for poverty reduction combines positive growth and redistribution. We study the conditions and policies that allow a country to achieve this scenario. Methodologically, we depart from the existing literature and estimate a single equation model where the dependent variable is defined from the combined evolution of growth and inequality. We then estimate a limited dependent variable regression using a rich specification of structural and policy factors. Our results point to a comforting picture: even countries that start from initially unfavourable conditions can achieve the favourable scenario of growth and redistribution by adopting appropriate policies.

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