Measuring the Impact of Price Changes on Poverty

Resumo

This paper develops a methodology to measure the impact of price changes on poverty measured by an entire class of additive separable poverty measures. This impact is captured by means of price elasticity of poverty. The total effect of changes in price on poverty is explained in terms of two components. The first component is the income effect of the change in price and the second is the distribution effect captured by the price changes. It is the distribution effect which determines whether the price changes benefit the poor proportionally more (or less) than the non-poor. This paper also derives a new price index for the poor (PIP). While this index can be computed for any poverty measures, our empirical analysis applied to Brazil is based on three poverty measures, the head-count ratio, the poverty gap ratio and the severity of poverty. The empirical results show that price changes in Brazil during the 1999-2006 period have occurred in a way that favors the non-poor proportionally more than the poor. Nevertheless, during the last 2-3 years the price changes have favored the poor relative to the non-poor.

Ficha do documento

Tipo

Estudo

Ano

2006

Instituição

Instituto de Pesquisa Econômica Aplicada

Fonte

Repositório do Ipea

Idioma

Inglês

Acesso

Acesso aberto

Identificador

oai:repositorio.ipea.gov.br:11058/15497

Licença

Licença total exclusiva

Palavras-chave

InflationPrice elasticityMoney metric utilityPrice index for the poor