Crises and the Poor: Socially Responsible Macroeconomics
AbstractThis 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 also may cause irreversible damage to the human capital of the poor. In light of this evidence, the author concludes that crisis avoidance and a pro-poor response to crisis should be a major component of a poverty reduction strategy. As a result, the paper analyses the role of exchange rate policy, capital controls and countercyclical fiscal policy in generating or avoiding crisis. 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 InfoPaper provided by Inter-American Development Bank in its series IDB Publications with number 29338.
Date of creation: Feb 2000
Date of revision:
Poverty; Economics; poverty; inequality; social reponsibility; macroeconomics;
Other versions of this item:
- Nora Lustig, 2000. "Crisis and the Poor: Socially Responsible Macroeconomics," Journal of LACEA Economia, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
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