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Crisis and the Poor: Socially Responsible Macroeconomics

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  • Nora Lustig

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Abstract

Macroeconomic crises not only affect the current living standards of the poor, but their ability to grow out of poverty. This paper presents evidence on the impact of economic crisis on poverty and inequality in Latin America. Crises not only result in higher poverty rates but may cause irreversible damage to the human capital of the poor. In light of this evidence, the author concludes that crisis avoidance and a propoor response to crisis should be a major component of a poverty reduction strategy. Therefore, the role of exchange rate policy, capital controls and counter-cyclical fiscal policy in generating or avoiding crisis analyzed. Responses to macroeconomic crisis are assessed by considering the effects of different policy combinations, the use of safety nets and the composition of fiscal adjustment to protect the income of the poor in the face of macroeconomic adjustment. The main lesson is that socially responsible macroeconomic policy can protect the poor during times of crisis and simultaneously contribute to lower chronic poverty.

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Bibliographic Info

Article provided by LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION in its journal JOURNAL OF LACEA ECONOMIA.

Volume (Year): (2000)
Issue (Month): ()
Pages:

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Handle: RePEc:col:000425:008710

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Keywords: macroeconomis crises; poverty; economic policy; Latin America;

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Cited by:
  1. Thierry Verdier, 2005. "Intégration commerciale « socialement responsable » : une approche en termes d'économie politique," Revue d’économie du développement, De Boeck Université, vol. 19(4), pages 55-121.
  2. Alejandro Gaviria Uribe, 2001. "Household Responses to Adverse Income Shocks in Latin America," INFORMES DE INVESTIGACIÓN 002795, FEDESARROLLO.
  3. Alejandro Gaviria, 2001. "Reacción de los hogares a las sacudidas adversas del ingreso en América Latina," Research Department Publications 4274, Inter-American Development Bank, Research Department.
  4. Miguel Braun & Luciano di Gresia, 2004. "Towards Effective Social Insurance in Latin America: The Importance of Countercyclical Fiscal Policy," Public Economics 0410001, EconWPA.
  5. Quentin Wodon & Rodrigo Castro & Kihoon Lee, 2001. "Poverty in Latin America: Trends (1986-1998) and Determinants," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 38(114), pages 127-153.
  6. María Ibarrarán & Matthias Ruth & Sanjana Ahmad & Marisa London, 2009. "Climate change and natural disasters: macroeconomic performance and distributional impacts," Environment, Development and Sustainability, Springer, vol. 11(3), pages 549-569, June.
  7. Miguel Braun & Luciano di Gresia, 2003. "Hacia un sistema de seguro social eficaz en América Latina: la importancia de una política fiscal anticíclica," Research Department Publications 4334, Inter-American Development Bank, Research Department.

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