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The myth of post-reform income stagnation: Evidence from Brazil and Mexico

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  • Filho, Irineu de Carvalho
  • Chamon, Marcos

Abstract

Economic policies are often judged by a handful of statistics, some of which may be biased during periods of change. We estimate the income growth implied by the evolution of food demand and durable good ownership in post-reform Brazil and Mexico, and find that changes in consumption patterns are inconsistent with official estimates of near stagnant incomes. That is attributed to biases in the price deflator. The estimated unmeasured income gains are higher for poorer households, implying marked reductions in “real” inequality. These findings challenge the conventional wisdom that post-reform income growth was low and did not benefit the poor.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 97 (2012)
Issue (Month): 2 ()
Pages: 368-386

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Handle: RePEc:eee:deveco:v:97:y:2012:i:2:p:368-386

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Household consumption; Measurement error; CPI bias; Economic reform; Trade liberalization; Inflation stabilization;

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Citations

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Cited by:
  1. Susan Olivia & John Gibson, 2013. "Using Engel curves to measure CPI bias for Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(1), pages 85-101, April.
  2. Almås, Ingvild & Johnsen, Åshild Auglænd, 2013. "The Cost of Living in China: Implications for Inequality and Poverty," Memorandum 06/2013, Oslo University, Department of Economics.
  3. Marcos Chamon & Irineu E. Carvalho Filho, 2013. "Consumption Based Estimates of Urban Chinese Growth," IMF Working Papers 13/265, International Monetary Fund.
  4. Irineu E. Carvalho Filho & Marcello M. Estevão, 2012. "Institutions, Informality, and Wage Flexibility," IMF Working Papers 12/84, International Monetary Fund.
  5. Cook, Jonathan Aaron, 2013. "Does Chinese Inflation Understate Cost of Living?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150571, Agricultural and Applied Economics Association.
  6. Garry F. Barrett & Matthew Brzozowski, 2010. "Using Engel Curves to Estimate the Bias in the Australian CPI," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 1-14, 03.

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