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Bolivia: Impact of shocks and poverty policy on household welfare

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  • 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

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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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Keywords: growth; Bolivia; poverty;

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References

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  1. Devaragan, Shantayanan & Lewis, Jeffrey D. & Robinson, Sherman, 1990. "Policy lessons from trade-focused, two-sector models," Journal of Policy Modeling, Elsevier, Elsevier, vol. 12(4), pages 625-657.
  2. Andersen, Lykke Eg, 2002. "Baja Movilidad Social en Bolivia: Causas y Consecuencias para el Desarrollo," Documentos de trabajo, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana 2/2002, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  3. 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, World Bank Group, vol. 7(1), pages 45-63, January.
  4. Lanjouw, Jean Olson & Lanjouw, Peter, 1997. "Poverty comparisons with non-compatible data: theory and illustrations," Policy Research Working Paper Series, The World Bank 1709, The World Bank.
  5. Angus Deaton & Salman Zaidi, 1999. "Guidelines for Constructing Consumption Aggregates For Welfare Analysis," Working Papers, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies. 217, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  6. 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, Inter-American Development Bank, Research Department 3181, Inter-American Development Bank, Research Department.
  7. Barja, Gover & Urquiola, Miguel, 2001. "Capitalization, regulation and the poor: access to basic services in Bolivia," MPRA Paper 23920, University Library of Munich, Germany, revised Jul 2001.
  8. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, Econometric Society, vol. 44(2), pages 219-31, March.
  9. Barja, Gover & Urquiola, Miguel, 2003. "Capitalization and Privatization in Bolivia: An Aproximation to an Evaluation," MPRA Paper 23049, University Library of Munich, Germany.
  10. Theile, Rainer & Wiebelt, Manfred, 2003. "Attacking Poverty in Bolivia – Past Evidence and Future Prospects: Lessons from a CGE Analysis," Documentos de trabajo, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana 6/2003, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
  11. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, Econometric Society, vol. 52(3), pages 761-66, May.
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Citations

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Cited by:
  1. 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).
  2. 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, Cambridge University Press, vol. 8(03), pages 396-397, July.
  3. 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, August.
  4. Marta Moratti, 2010. "Consumption Poverty and Pro-Poor Growth in Bolivia," Working Paper Series, Department of Economics, University of Sussex 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, The World Bank 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, Journal of International Agricultural Trade and Development, vol. 5(1).

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