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The Myth of Post-Reform Income Stagnation: Evidence from Brazil and Mexico

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  • Irineu E. Carvalho Filho
  • Marcos Chamon

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

Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/197.

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Length: 52
Date of creation: 01 Aug 2008
Date of revision:
Handle: RePEc:imf:imfwpa:08/197

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Keywords: Trade liberalization; Data analysis; Income; Private consumption; Consumer prices; Economic models;

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Cited by:
  1. Yavuz Arslan & Evren Ceritoglu, 2011. "Kalite Artislari ve Enflasyon : Turkiye Ornegi," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 11(1), pages 1-9.
  2. 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.
  3. 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.
  4. Trevon D. Logan, 2008. "Are Engel Curve Estimates of CPI Bias Biased?," NBER Working Papers 13870, National Bureau of Economic Research, Inc.
  5. Manoel Bittencourt, 2007. "Inflation and Financial Development: Evidence from Brazil," Ibero America Institute for Econ. Research (IAI) Discussion Papers 165, Ibero-America Institute for Economic Research.
  6. Irineu E. Carvalho Filho & Marcello M. Estevão, 2012. "Institutions, Informality, and Wage Flexibility: Evidence from Brazil," IMF Working Papers 12/84, International Monetary Fund.
  7. M.-É. Clerc & É. Coudin, 2010. "The CPI, Mirror of the Cost of Living in France? Evidence based on the Engel Curves Analysis," Documents de Travail de la DESE - Working Papers of the DESE g2010-04, Institut National de la Statistique et des Etudes Economiques, DESE.
  8. Susan Olivia & John Gibson, 2012. "Using Engel Curves to Measure CPI Bias for Indonesia," Monash Econometrics and Business Statistics Working Papers 13/12, Monash University, Department of Econometrics and Business Statistics.
  9. Marcos Chamon & Irineu E. Carvalho Filho, 2013. "Consumption Based Estimates of Urban Chinese Growth," IMF Working Papers 13/265, International Monetary Fund.
  10. 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.

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