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The Myth of Post-Reform Income Stagnation

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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; expenditure; expenditures; total expenditure; expenditure distribution; income growth; household income; household expenditure; labor income; household consumption; distribution of expenditure; expenditure level; current income; consumption patterns; expenditure growth; aggregate consumption; household expenditures; consumer price index; household characteristics; expenditure survey; price deflator; total expenditures; expenditure levels; consumption basket; income inequality; expenditure data; consumption measurement error; expenditure share; expenditure information; income data; expenditure increase; consumption based estimates; expenditure shares; expenditure groups; consumer demand; labour income; household consumption expenditures; consumption baskets; income effect; consumption growth; consumption expenditures; household budget; estimates of expenditure; permanent income; consumption data; expenditure inequality; definition of expenditures; consumption pattern; household expenditure survey;

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References

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Citations

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Cited by:
  1. 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, Institut National de la Statistique et des Etudes Economiques, DESE g2010-04, Institut National de la Statistique et des Etudes Economiques, DESE.
  2. Irineu E. Carvalho Filho & Marcello M. Estevão, 2012. "Institutions, Informality, and Wage Flexibility," IMF Working Papers 12/84, International Monetary Fund.
  3. Bittencourt, Manoel, 2007. "Inflation and Financial Development: Evidence from Brazil," Proceedings of the German Development Economics Conference, Göttingen 2007 1, Verein für Socialpolitik, Research Committee Development Economics.
  4. Susan Olivia & John Gibson, 2012. "Using Engel Curves to Measure CPI Bias for Indonesia," Working Papers in Economics, University of Waikato, Department of Economics 12/06, University of Waikato, Department of Economics.
  5. Yavuz Arslan & Evren Ceritoglu, 2010. "Kalite Artislari ve Enflasyon : Turkiye Ornegi," CBT Research Notes in Economics, Research and Monetary Policy Department, Central Bank of the Republic of Turkey 1017, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  6. Trevon D. Logan, 2008. "Are Engel Curve Estimates of CPI Bias Biased?," NBER Working Papers 13870, National Bureau of Economic Research, Inc.

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