NEW BUDGET STANDARD POVERTY LINES FOR MALAYSIA

In this paper, shortcomings of the official poverty line are examined. A new set of budget standard poverty lines were derived for various years between 1959 and 1981, by first estimating the food budget for Malaysian households. Then, an allowance for non-food items was obtained on the basis of the estimated food budget, and the relationship between the proportion of income allocated on food and non-food items, together yielding the poverty line. The results suggest that the official and other estimates of the poverty line income were generally higher, and thus have overestimated the extent of poverty in Malaysia.     

Dependency traps in self‐targeting food aid programs

We present an economy of farmers where food aid is warranted due to poverty traps triggered by nonconvex production sets. We model a food‐aid intervention as a dynamic game between a food‐aid manager and the farmers in a context of asymmetrical information. The food‐aid manager is motivated by a relief objective and targets farmers suffering the poverty trap. The food‐aid manager uses a self‐targeting mechanism by providing the aid through a food wage in exchange for participation in the intervention's activities. Guided by the relief objective and targeting constraint, he fixes the food wage equal to the reservation wage of the farmers not suffering the poverty trap. Dependency traps will then happen every time there is a considerable technological and nutritional gap between farmers who are in and out of the poverty trap. When there is a gap, poor farmers earn more working for the reservation wage of the well‐off farmers than by working in their own farm. Dependency can be overcome only if the food‐aid program allows farmers to upgrade their productive technologies and catch up with those farmers who are out of the poverty trap.     

Poverty and social exclusion: two sides of the same coin or dynamically interrelated processes?

There is growing interest in the analysis and measurement of social exclusion, to complement the static and dynamic literature on income poverty. On theoretical grounds, social exclusion and income poverty are seen as different processes, but with closely interrelated dynamics. However, our empirical understanding of the way these two processes dynamically interact at the individual level is still very limited. To shed some light on the issue, we use a dynamic bivariate probit model, controlling for unobserved heterogeneity and Wooldridge (2005)-type initial conditions. Both the first- and second-order Markov dynamics are examined. We estimate the model using the Italian sample of the European Community Household Panel (ECHP), waves 1–8, and find a sizable extent of state dependence in both poverty and social exclusion. Moreover, there are dynamic cross-effects implying that poverty and social exclusion are mutually reinforcing. Social policies aimed at eradicating poverty and avoiding individuals’ social and economic marginalization should take these interaction effects explicitly into account.     

物价波动、收入增长和地区差距对中国贫困线的影响

我国贫困线的增长机制是只与物价挂钩,不与收入挂钩。由于食品价格增长高于消费价格指数增长,这种调整机制导致贫困线绝对购买力下降;同时,随着收入的快速增长,贫困线相对购买力急剧下降。另外,贫困线与地区经济发展水平高度相关,造成地区间受助穷人的生活质量相差巨大。     

URBAN POVERTY IN CHINA AND ITS CONTRIBUTING FACTORS, 1986–2000

Food price increases and the introduction of radical social welfare and enterprise reforms during the 1990s generated significant changes in the lives of urban households in China. During this period urban poverty increased considerably. This paper uses household level data from 1986 to 2000 to examine what determines whether households fall below the poverty line over this period and investigates how the impact of these determinants has changed through time. We find that large households and households with more nonworking members are more likely to be poor, suggesting that perhaps the change from the old implicit price subsidies, based on household size, to an explicit income subsidy, based on employment, has worsened the position of large families. Further investigation into regional poverty variation indicates that over the 1986–93 period food price increases were also a major contributing factor. Between 1994 and 2000 the worsening of the economic situation of state sector employees contributed to the poverty increase.     

Sen measures of poverty in the United States: Cash versus comprehensive incomes in the 1990s

Recently developed statistical inference procedures for the Sen index and its components – the headcount, income gap and Gini index among the poor – are used to test explicit hypotheses concerning aggregate poverty in the United States for the period 1989 to 1997. Changes in Sen measures of poverty are investigated for cash and comprehensive income using the official poverty line and six additional poverty lines drawn using thresholds set at 50, 75, 125, 150, 175 and 200 percent of the official level. The paper also reports on the effects of using comprehensive income on subgroup poverty rates and on the demographic composition of the poor.     

A Method of Calculating Regional Consumer Price Differentials with Illustrative Evidence from India

In this paper we propose a method of estimating multilateral regional price index numbers from a given household level data set on item-wise unit values/prices. The method is closely related to the Country-Product Dummy variable model of Summers (1973). This method is likely to be particularly useful in studies of regional comparisons of poverty and inequality, optimal commodity taxes and tax reforms. To illustrate the method, we use it to calculate the regional consumer price index numbers for Eastern, Western and Southern India (taking Northern India as the reference region) separately for three categories of rural and urban households, viz., all households and those below and above the poverty line, using household level unit records of the NSS 50th round (1993–94) Consumer Expenditure Survey.     

POVERTY COMPARISONS WITH ABSOLUTE POVERTY LINES ESTIMATED FROM SURVEY DATA

The objective of measuring poverty is usually to make comparisons over time or between two or more groups. Common statistical inference methods are used to determine whether an apparent difference in measured poverty is statistically significant. Studies of relative poverty have long recognized that when the poverty line is calculated from sample survey data, both the variance of the poverty line and the variance of the welfare metric contribute to the variance of the poverty estimate. In contrast, studies using absolute poverty lines have ignored the poverty line variance, even when the poverty lines are estimated from sample survey data. Including the poverty line variance could either reduce or increase the precision of poverty estimates, depending on the specific characteristics of the data. This paper presents a general procedure for estimating the standard error of poverty measures when the poverty line is estimated from survey data. Based on bootstrap methods, the approach can be used for a wide range of poverty measures and methods for estimating poverty lines. The method is applied to recent household survey data from Mozambique. When the sampling variance of the poverty line is taken into account, the estimated standard errors of Foster–Greer–Thorbecke and Watts poverty measures increase by 15–30 percent at the national level, with considerable variability at lower levels of aggregation.     

International Market Access and Poverty in Argentina

This paper examines the impact of access to international agro‐manufacture markets on poverty in Argentina. Estimates from the literature suggest that expanded market access would cause the international price of Argentine exports of agro‐manufactures to increase by between 8.7% and 15.9%. I explore two poverty effects caused by these prices changes: on food expenditure and on wages. Using a household budget survey, I estimate the impact of higher food prices on the Argentine poverty line. Using a labor force survey, I estimate the responses of wages to changes in export prices. My main finding is that market access would cause poverty to decline in Argentina. From a national head count of 29.26%, the poverty rate would decline to between 28.28% and 28.80%. This means that between 161,000 and 343,000 Argentines would be moved out of poverty.     

THE MEASUREMENT OF POVERTY WITH GEOGRAPHICAL AND INTERTEMPORAL PRICE DISPERSION: EVIDENCE FROM RWANDA

It is not known to what extent welfare measures result from seasonal and geographical price differences rather than from differences in living standards across households. Using data from Rwanda in 1983, we show that the change in mean living standard indicators caused by local and seasonal price deflation is moderately significant at every quarter. By contrast, the differences in poverty measures caused by this deflation can be considerable, for chronic as well as transient or seasonal poverty indicators. Thus, poverty monitoring and anti-poverty targeting can be badly affected by inaccurate deflation of living standard data. Moreover, when measuring seasonal poverty, the deflation based on regional prices instead of local prices only partially corrects for spatial price dispersion. Using annual local prices instead of quarterly local prices only yields a partial deflation, which distorts the measure of poverty fluctuations across seasons and biases estimates of annual and chronic poverty.     

Fixing income and price targets for the poor in india

The poverty line, generally defined as the minimum income level necessary to enable a person to consume a normatively stipulated basket of goods, is widely used to set income target for the poor. But mere provision of this target income will not lead the poor to adopt the normative consumption pattern. In order to induce them to do so, it is necessary to set suitable price targets along with the income target. An attempt has been made here to fix these targets assuming that the consumers' demand pattern can be represented by the linear expenditure system. A numerical exercise has been worked out for rural India.     

Rethinking multidimensional poverty through a multi-criteria analysis

The risk of poverty or social exclusion constitutes the pivotal multidimensional indicator of living conditions in the European Union. Nevertheless, it only reports the proportion of individuals at risk and disregards the depth of poverty. The indicator therefore overlooks situations of possible vulnerable groups just above the threshold and is not sensitive to all dimensions in which the individual is at risk. In this paper we propose an alternative multi-criteria based approach that overcomes these problems. Our measure captures information about the level of achievement in each dimension of all persons along the distribution and evaluates to what extent the concurrence of multiple deprivations reinforces their disadvantage. This approach permits diverse ways of aggregation with different degrees of substitutability among the achievements of each dimension according to context-specific social preferences. We illustrate our approach with an empirical analysis of 28 countries using the European Union Statistics on Income and Living Conditions database for 2016. The results reveal that work intensity may be regarded as the most determining factor in analyses of multidimensional poverty across European countries. Our measures unmask how countries with similar proportions of individuals at risk of poverty or social exclusion hide very different conditions of multidimensional poverty and highlight the variety of socioeconomic realities existing behind the dichotomy imposed by the usual ‘at risk of poverty or social exclusion’ rate.     

A Behavior‐Based Approach to the Estimation of Poverty in India

Estimates of poverty in India are crucial inputs for the understanding of world poverty, yet there is much disagreement about the numbers and the legitimacy of methods used to derive them. In this paper, we propose and justify an alternative approach to identify the poor, which uses the proportion of income spent on food. Our estimates have weaker data requirements than official methods, and they compare favorably with several validation tests. Most notably, households around our state poverty lines obtain their calories from similar sources, whereas this is not true of official poverty lines. We also find that rates of self‐reported hunger are higher in states that we classify as poor.     

Public procurement policy and the Czech industry

The aim of this paper is to specify the extent of buy-national policies of the Czech Republic and the impact of opening its public procurement market to domestic production and employment due to the Europe Agreements of 1995. Two series of indicators are proposed for measuring the impact of Czech buy-national policies. The first series outlines the behavior of the public sector vis-à-vis domestic production and imports. The second series sketches the industrial structure of the sectors which, following the above analysis, seem to be protected by preferential public procurement. The interaction of both series of indicators can provide information about the level of protection in terms of public procurement on a sectoral level. This paper is part of the Phare Program of Action for Cooperation in Economics, a research project launched by the Commission of the European Union. The authors gratefully acknowledge contributions by Andrew Cox and anonymous project referees. The authors are responsible for any remaining errors.     

Re-evaluating differences in poverty among central city,suburban, and nonmetropolitan areas of the US

Poverty in the United States varies greatly by location. The difference in poverty intensity among locations, however, has only been evaluated by the official poverty measure – the headcount ratio – which has several drawbacks. The official poverty statistics also suffer from use of a single, arbitrary poverty line. This paper uses a recently-developed distribution-sensitive measure of poverty and 1990 census data to reconsider the difference among central city, suburban, and nonmetropolitan poverty levels, as well as differences among US regions. Instead of using a single, arguable poverty line, this paper lets the poverty line vary over an income range so that conclusions are more robust. We check for significance of differences across locations by applying some recently-developed methods of statistical inference.     

CHINESE POVERTY: ASSESSING THE IMPACT OF ALTERNATIVE ASSUMPTIONS

This paper investigates how estimates of the extent and trend of consumption poverty in China between 1990 and 2004 vary as a result of alternative plausible assumptions concerning the poverty line and estimated levels of consumption. Our methodology focuses on the following sources of variation: purchasing power exchange rates (used to convert an international poverty line), alternative levels and distributions of private incomes, alternative estimates of the propensity to consume of different income groups, and alternative spatial and temporal price indices. We report national, urban and rural poverty estimates corresponding to distinct assumptions. It is widely believed that substantial poverty reduction took place in China in the 1990s, and we find this conclusion to be largely robust to the choice of assumptions, although estimates of the extent of Chinese poverty, and therefore of world poverty, in any year are greatly influenced by this choice.     

Food quality,calories and household income

We investigate the relationship between calories, food quality and household per capita expenditure using regression and semiparametric methods on a sample of poor households from rural Mexico, where Programa de Apoyo Alimentario (PAL), a targeted nutritional programme, is operating. The semiparametric method yields an estimate of the elasticity between calories and expenditure of 0.39 below the median and 0.28 above. The corresponding estimates of the elasticity of the calorie price are 0.48 below the median and 0.45 above. We also examine the extent to which the expenditure elasticity of the calorie price is explained by substitution between and within major food groups. We find that there is a very high incidence of substitution within cereals (especially for poor households) and that between group substitution explains at most 59% of the income elasticity for food quality. These estimates suggest that the potential of a cash transfer programme to have a positive impact on the food diversity and the nutritional status of households is quite limited.     

THE PUZZLING DIVERGENCE OF RENTS AND USER COSTS, 1980–2004

This paper demonstrates that, in the context of U.S. housing data, rents and ex ante user costs diverge markedly—in both growth rates and levels—for extended periods of time, a seeming failure of arbitrage and a puzzle from the perspective of standard capital theory. The tremendous volatility of even appropriately‐smoothed ex ante annual user cost measures implies that such measures are unsuitable for inclusion in official price statistics. The divergence holds not only at the aggregate level, but at the metropolitan‐market level as well, and is robust across different house price and rent measures. But transactions costs matter: the large persistent divergences did not imply the presence of unexploited profit opportunities. In particular, even though detached housing is readily moved between owner and renter markets, and the detached‐unit rental market is surprisingly thick, transactions costs would have prevented risk‐neutral investors from earning expected profits by buying a property to rent out for a year, and would have prevented risk‐neutral homeowners from earning expected profits by selling their homes and becoming renters for a year. Finally, computing implied appreciation as a residual yields a house price forecast with huge errors; but either longer‐horizon or no‐real‐capital‐gains forecasts—which turn out to have similar forecast errors—imply a far less divergent user cost measure which might ultimately be useful for official price statistics. Some conjectures are offered.     

Inflation targeting and the need for a new central banking framework

This article critically analyzes inflation targeting (IT) both theoretically and empirically. IT came into prominence in the 1990s and 1 central bank after another adopted this regime in the 1990s and 2000s. Proponents of IT mainly argued that IT regime was successful on the grounds that it resulted in lower inflation rates and hence better economic performances. However, inflation rates in the world were in a downward trend from the 1980s well into the 2000s, and both IT and non-IT regimes managed to decrease their inflation rates. In addition, focusing too much on price stability through IT paved the way for permanently higher than necessary interest rates and disinflationary “tight” monetary policy periods when inflation rate was above an arbitrarily targeted level. Tight monetary policy can and do affect the real economy negatively and overemphasizing price stability may hurt the economy in terms of lower potential output, decreasing investment and more unequal income distribution. Post Keynesians offer valuable alternatives within the framework of parking-it approach to the existing monetary policy paradigm. Our main conclusion is that central banks should set the policy interest rate as low as possible and keep it there, in line with Keynesian “cheap money” policy.     

Spatial differences in poverty: The case of Peru

This paper examines the implications of spatial differences in living costs for measures of poverty. Taking Peru as a case study, spatial price indices are used to calculate location-specific poverty lines, based on the local cost of a basket of basic needs. Applied to income distribution data, these poverty lines yield measures of the extent and location of poverty. The paper shows that these measures are significantly different from, and much more accurate than those obtained using a single countrywide poverty line; the latter can give a misleading picture of poverty by over- stating spatial differences, in general overestimating rural and underestimating urban poverty.