The impact of food inflation on urban poverty and its monetary cost : some back-of-the-envelope calculations
AbstractThis paper uses a sample of 73 developing countries to estimate the change in the cost of alleviating urban poverty brought about by the recent increase in food prices. This cost is approximated by the change in the poverty deficit, that is, the variation in financial resources required to eliminate poverty under perfect targeting. The results show that, for most countries, the cost represents less than 0.1 percent of gross domestic product. However, in the most severely affected, it may exceed 3 percent. In all countries, the change in the poverty deficit is mostly due to the negative real income effect of those households that were poor before the price shock, while the cost attributable to new households falling into poverty is negligible. Thus, in countries where transfer mechanisms with effective targeting already exist, the most cost-effective strategy would be to scale up such programs rather than designing tools to identify the new poor.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4666.
Date of creation: 01 Jul 2008
Date of revision:
Rural Poverty Reduction; Population Policies; Food&Beverage Industry; Debt Markets;
Other versions of this item:
- Sébastien Dessus & Santiago Herrera & Rafael de Hoyos, 2008. "The impact of food inflation on urban poverty and its monetary cost: some back-of-the-envelope calculations," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 417-429, November.
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- Jed Friedman & James Levinsohn, 2001.
"The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: "A Rapid Response Methodology","
William Davidson Institute Working Papers Series
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