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Purchasing Power Parity Exchange Rates for the Global Poor

  • Angus Deaton
  • Olivier Dupriez

The global poverty count uses a common global poverty line, often referred to as the dollar-a-day line, currently $1.25 at 2005 international prices, whose construction and application depends on purchasing power parity (PPP) exchange rates for consumption. The price indexes that underlie the PPPs used for this purpose are constructed for purposes of national income accounting, using weights that represent patterns of aggregate consumption, not the consumption patterns of the global poor. We use household surveys from 62 developing countries to calculate global poverty-weighted PPPs and to calculate global poverty lines and new global poverty counts. (JEL C43, E21, F31, I32, O15)

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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 3 (2011)
Issue (Month): 2 (April)
Pages: 137-66

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Handle: RePEc:aea:aejapp:v:3:y:2011:i:2:p:137-66
Note: DOI: 10.1257/app.3.2.137
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  1. Angus Deaton, 2010. "Price indexes, inequality, and the measurement of world poverty," Working Papers 1207, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  2. Angus Deaton, 2005. "ERRATUM: Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 395-395, May.
  3. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
  4. Angus Deaton & Alan Heston, 2010. "Understanding PPPs and PPP-Based National Accounts," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 1-35, October.
  5. Angus Deaton, 2004. "Measuring poverty in a growing world (or measuring growth in a poor world)," Working Papers 178, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  6. Chen, Shaohua & Ravallion, Martin, 2008. "The developing world is poorer than we thought, but no less successful in the fight against poverty," Policy Research Working Paper Series 4703, The World Bank.
  7. Diewert, Erwin, 2008. "New Methodology for Linking the Regions," Economics working papers erwin_diewert-2008-9, Vancouver School of Economics, revised 09 Sep 2008.
  8. Summers, Robert, 1973. "International Price Comparisons Based Upon Incomplete Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 19(1), pages 1-16, March.
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