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The Effects of Rising Food and Fuel Costs on Poverty in Pakistan

  • Theresa Chaudhry

    ()

    (Lahore School of Economics, Pakistan.)

  • Azam Chaudhry

    ()

    (Lahore School of Economics, Pakistan.)

The dramatic increase in international food and fuel prices in recent times is a crucial issue fordeveloping countries and the most vulnerable to these price shocks are the poorest segments of society. In countries like Pakistan, the discussion has focused onthe impact of substantially higher food and fuel prices on poverty. This paper used PSLM and MICS household level data to analyze the impact of higher food and energy prices on the poverty head count and the poverty gap ratio in Pakistan. Simulated food and energy price shocks present some important results: First, the impact of food price increases on Pakistani poverty levels is substantially greater than the impact of energy price increases. Second, the impact of food price inflation on Pakistani poverty levels is significantly higher for rural populations as compared to urban populations. Finally, food price inflation can lead to significant increases in Pakistani poverty levels: For Pakistan as a whole, a 20% increase in food prices would lead to an 8% increase in the poverty head count.

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Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

Volume (Year): 13 (2008)
Issue (Month): Special Edition (September)
Pages: 117-138

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Handle: RePEc:lje:journl:v:13:y:2008:i:sp:p:117-138
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  1. Hyun H. Son & Nanak Kakwani, 2006. "Measuring the impact of prices on inequality: with applications to Thailand and Korea," Working Papers 11, International Policy Centre for Inclusive Growth.
  2. Hyun Son & Nanak Kakwani, 2006. "Measuring the impact of prices on inequality: With applications to Thailand and Korea," Journal of Economic Inequality, Springer, vol. 4(2), pages 181-207, August.
  3. Hyun H. Son & Nanak Kakwani, 2006. "Measuring the Impact of Price Changes on Poverty," Working Papers 33, International Policy Centre for Inclusive Growth.
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