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Prices, Engel Curves, and Time-Space Deflation: Impacts on Poverty and Inequality in Vietnam

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  • John Gibson
  • Trinh Le
  • Bonggeun Kim

Abstract

Many developing countries lack spatially disaggregated price data. Some analysts use “no-price” methods by using a food Engel curve to derive the deflator as that needed for nominally similar households to have equal food shares in all regions and time periods. This method cannot be tested in countries where it is used as a spatial deflator since they lack suitable price data. In this paper, data from Vietnam are used to test this method against benchmarks provided by multilateral price indexes calculated from repeated spatial price surveys. Deflators from a food Engel curve appear to be a poor proxy for deflators obtained from multilateral price indexes. To the extent that such price indexes reliably compare real living standards over time and space, these results suggest that estimates of the level, location, and change in poverty and inequality would be distorted if the Engel method deflator was used in their stead.

Suggested Citation

  • John Gibson & Trinh Le & Bonggeun Kim, 2017. "Prices, Engel Curves, and Time-Space Deflation: Impacts on Poverty and Inequality in Vietnam," The World Bank Economic Review, World Bank, vol. 31(2), pages 504-530.
    • Handle: RePEc:oup:wbecrv:v:31:y:2017:i:2:p:504-530.
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    Cited by:

    1. Schneider, Kate R., 2022. "Nationally representative estimates of the cost of adequate diets, nutrient level drivers, and policy options for households in rural Malawi," Food Policy, Elsevier, vol. 113(C).
    2. Gibson, John & Le, Trinh, 2019. "Using local expert knowledge to measure prices: Evidence from a survey experiment in Vietnam," MPRA Paper 92533, University Library of Munich, Germany.
    3. Christophe Muller & Nouréini Sayouti, 2021. "How does information on minimum and maximum food prices affect measured monetary poverty? Evidence from Niger," AMSE Working Papers 2102, Aix-Marseille School of Economics, France, revised Oct 2021.
    4. Dwayne Benjamin & Loren Brandt & Brian McCaig, 2017. "Growth with equity: income inequality in Vietnam, 2002–14," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 25-46, March.
    5. Martin Ravallion, 2016. "Toward better global poverty measures," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 227-248, June.
    6. Van Der Weide,Roy & Blankespoor,Brian & Elbers,Chris T.M. & Lanjouw,Peter F., 2022. "How Accurate Is a Poverty Map Based on Remote Sensing Data ? An Application to Malawi," Policy Research Working Paper Series 10171, The World Bank.
    7. Shohei Nakamura & Rawaa Harati & Somik V Lall & Yuri M Dikhanov & Nada Hamadeh & William Vigil Oliver & Marko Olavi Rissanen & Mizuki Yamanaka, 2020. "Comparing Costs of Living across World Cities," The World Bank Economic Review, World Bank, vol. 34(Supplemen), pages 79-88.
    8. Andrew Dabalen & Isis Gaddis & Nga Thi Viet Nguyen, 2020. "CPI Bias and its Implications for Poverty Reduction in Africa," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(1), pages 13-44, March.
    9. Jolliffe,Dean Mitchell & Mahler,Daniel Gerszon & Veerappan,Malarvizhi & Kilic,Talip & Wollburg,Philip Randolph, 2021. "Under What Conditions Are Data Valuable for Development ?," Policy Research Working Paper Series 9811, The World Bank.
    10. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    11. John Gibson & Bonggeun Kim, 2017. "30 Years of Being Wrong: A Systematic Review and Critical Test of the Cox and Wohlgenant Approach to Quality-Adjusted Prices in Demand Analysis," Working Papers in Economics 17/16, University of Waikato.
    12. Prema-chandra Athukorala, 2021. "Asian economic development: A primer," Departmental Working Papers 2021-07, The Australian National University, Arndt-Corden Department of Economics.
    13. Linh Thuy Nguyen & Christopher Gan & Baiding Hu, 2021. "Why is Ethnic Minority Poverty Severe? The Case of Rural Vietnam," Asian Development Policy Review, Asian Economic and Social Society, vol. 9(3), pages 161-179.
    14. Chen,Xiaomeng & Mungai,Rose & Nakamura,Shohei & Pearson,Thomas Patrick & Wambile,Ayago Esmubancha & Yoshida,Nobuo, 2020. "How Useful is CPI Price Data for Spatial Price Adjustment in Poverty Measurement? : A Case from Ghana," Policy Research Working Paper Series 9388, The World Bank.
    15. John Gibson & Trinh Le, 2018. "Improved Modelling of Spatial Cost of Living Differences in Developing Countries: A Comparison of Expert Knowledge and Traditional Price Surveys," Working Papers in Economics 18/08, University of Waikato.
    16. Ha,Jongrim & Ivanova,Anna & Ohnsorge,Franziska Lieselotte & Unsal Portillo Ocando,Derya Filiz, 2019. "Inflation : Concepts, Evolution, and Correlates," Policy Research Working Paper Series 8738, The World Bank.
    17. Chao Li & John Gibson, 2018. "Regional Inequality in China allowing for Spatial Cost-of-Living Differences: Evidence from a Hedonic Analysis of Apartment Prices," Working Papers in Economics 18/12, University of Waikato.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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