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Bolivia: Impact of shocks and poverty policy on household welfare

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Author Info

  • Barja Daza, Gover

    (Universidad Católica Boliviana "San Pablo")

  • Monterrey Arce, Javier

    (Instituto Nacional de Estadística, Bolivia)

  • Villarroel Böhrt, Sergio

    (Ministro del departamento de Economía, Bolivia)

Abstract

This paper evaluates the short term impacts on poverty of pro-poor expenditure during the 1998-2002 period of Bolivian economic recession. Observed characteristics of recession are simulated by the combined effects of negative terms of trade shock, reduction in foreing saving flows and low output growth. Evaluation is performed by simulating the impacts of shocks and social expendituresin an environment of low growth: i) on macro aggregates of consumption, income, saving and prices (based on a simple static 1-2-3 model), ii) on household income and consumption levels, and iii)on consumption based poverty indicators. The following were main results from experiments: The termsof trade shock had greater negative impact on household income then reduction in foreing saving flows. In contrast, reduction in foreing saving flows had greater negative impact on house hold consumption then the terms of trade shock. The head count ratio has been greater from reduction in foreing saving flows then from the terms of trade shock. Poverty gap and poverty intensity has concentrated in rural áreas, being greater from reduction in foreing saving flows then from the terms of trade shock. The Combined positive effects from observed social expenditure policy and effort in an environment of low output gorwth, did not compensate the combined negative impacts from the experienced terms of trade shock and reduction in foreing saving flows. These conclusions show that under macroeconomic disequilibrium poverty reduction efforts become policies of poverty contaiment or safety net programs. Poverty reduction is a long term objetive that requires long term commitment for an enviroment on macroeconomic stability.

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Bibliographic Info

Article provided by Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana in its journal Revista Latinoamericana de Desarrollo Economico.

Volume (Year): (2006)
Issue (Month): 6 (Abril)
Pages: 63-123

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Handle: RePEc:ris:revlde:0603

Contact details of provider:
Postal: Universidad católica Boliviana San Pablo, Instituto de Investigaciones Socio Económicas, Av. 14 de septiembre 4807. Obrajes, La Paz, Bolivia
Phone: (591-2) 784159
Fax: (591-2) 786707
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Web page: http://www.iisec.ucb.edu.bo
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Related research

Keywords: growth; Bolivia; poverty;

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References

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  1. Deaton, A. & Zaidi, S., 1999. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," Papers 192, Princeton, Woodrow Wilson School - Development Studies.
  2. Lanjouw, Jean Olson & Lanjouw, Peter, 1997. "Poverty comparisons with non-compatible data: theory and illustrations," Policy Research Working Paper Series 1709, The World Bank.
  3. Barja, Gover & Urquiola, Miguel, 2001. "Capitalization, Regulation and the Poor: Access to Basic Services in Bolivia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Theile, Rainer & Wiebelt, Manfred, 2003. "Attacking Poverty in Bolivia – Past Evidence and Future Prospects: Lessons from a CGE Analysis," Documentos de trabajo 6/2003, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  5. Gover Barja Daza & Javier Monterrey Arce & Sergio Villarroel Bohrt, 2005. "The Elasticity of Substitution in Demand for Non-Tradable Goods in Bolivia," Research Department Publications 3181, Inter-American Development Bank, Research Department.
  6. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
  7. Devaragan, Shantayanan & Lewis, Jeffrey D. & Robinson, Sherman, 1990. "Policy lessons from trade-focused, two-sector models," Journal of Policy Modeling, Elsevier, vol. 12(4), pages 625-657.
  8. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  9. Andersen, Lykke Eg, 2002. "Baja Movilidad Social en Bolivia: Causas y Consecuencias para el Desarrollo," Documentos de trabajo 2/2002, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  10. Barja, Gover & Urquiola, Miguel, 2003. "Capitalization and Privatization in Bolivia: An Aproximation to an Evaluation," MPRA Paper 23049, University Library of Munich, Germany.
  11. Devarajan, Shantayanan & Lewis, Jeffrey D & Robinson, Sherman, 1993. "External Shocks, Purchasing Power Parity, and the Equilibrium Real Exchange Rate," World Bank Economic Review, World Bank Group, vol. 7(1), pages 45-63, January.
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Citations

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Cited by:
  1. Behrman, Jere R., 2009. "Analyzing the Distributional Impact of Reforms, Volume Two: A Practitioner's Guide to Pension, Health, Labor Market, Public Sector Downsizing, Taxation, Decentralization, and Macroeconomic Modeling. A," Journal of Pension Economics and Finance, Cambridge University Press, vol. 8(03), pages 396-397, July.
  2. Aline Coudouel & Stefano Paternostro, 2006. "Analyzing the Distributional Impact of Reforms : A Practitioner’s Guide to Pension, Health, Labor Markets, Public Sector Downsizing, Taxation, Decentralization, and Macroeconomic Modeling, Volume 2," World Bank Publications, The World Bank, number 7041, October.
  3. Yanez-Pagans, Monica, 2008. "Culture and Human Capital Investments: Evidence of an Unconditional Cash Transfer Program in Bolivia," IZA Discussion Papers 3678, Institute for the Study of Labor (IZA).
  4. Marta Moratti, 2010. "Consumption Poverty and Pro-Poor Growth in Bolivia," Working Paper Series 1310, Department of Economics, University of Sussex.
  5. Essama-Nssah, B., 2005. "The poverty and distributional impact of macroeconomic shocks and policies : a review of modeling approaches," Policy Research Working Paper Series 3682, The World Bank.
  6. Anonymous, 2009. "Journal of International Agricultural Trade and Development, Volume 5, Issue 1," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 5(1).

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