Adjustment and income distribution: a counterfactual analysis

Francois Bourguinon, William Branson and Jaime de Melo

No 215, Policy Research Working Paper Series from The World Bank

Abstract: This paper presents model simulations to quantify the effects of different stabilization packages in the distribution of income and wealth. The simulations suggest that a sharply contractionary stabilization package has a major adverse impact on the distribution of income. The shifts in distribution are likely to make the package less sustainable. The simulations support the view that stabilization packages which do not have specific components targeted to the poor will redistribute income in a way that, although transitory, is likely to permanently harm those below the poverty line - in terms of things like nutrition, health, and education. The sharp redistributive effects of stabilization packages that omit specific targeted policies to alleviate poverty are also likely to endanger the sustainability of the adjustment package.

Keywords: Economic Theory&Research; Environmental Economics&Policies; Economic Stabilization; Banks&Banking Reform; Inequality (search for similar items in EconPapers)
Date: 1989-05-31
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Citations: View citations in EconPapers (11)

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Working Paper: Adjustment and Income Distribution: A Counterfactual Analysis (1989)
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