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Four Scenarios of Poverty Reduction and the Role of Economic Policy

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The most favourable scenario for poverty reduction combines positive growth and redistribution. We study the conditions and policies that allow a country to achieve this scenario. Methodologically, we depart from the existing literature and estimate a single equation model where the dependent variable is defined from the combined evolution of growth and inequality. We then estimate a limited dependent variable regression using a rich specification of structural and policy factors. Our results point to a comforting picture: even countries that start from initially unfavourable conditions can achieve the favourable scenario of growth and redistribution by adopting appropriate policies.

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Paper provided by School of Economics, University of Queensland, Australia in its series MRG Discussion Paper Series with number 3109.

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Handle: RePEc:qld:uqmrg6:31

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  16. Cecilia Garcia-Penalosa & Stephen Turnovsky, . "Growth, Income Inequality, and Fiscal Policy: What are the Relevant Tradeoffs?," Working Papers, University of Washington, Department of Economics UWEC-2006-27-P, University of Washington, Department of Economics.
  17. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers, China Economics and Management Academy, Central University of Finance and Economics 575, China Economics and Management Academy, Central University of Finance and Economics.
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