IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/283452.html
   My bibliography  Save this paper

Poverty Analysis Using An International Cross-Country Demand System

Author

Listed:
  • Cranfield, J.A.L.
  • Preckel, Paul V.
  • Hertel, Thomas W.

Abstract

This paper proposes a new method for ex ante analysis of the poverty impacts arising from policy reforms. Three innovations underlie this approach. The first is the estimation of a global demand system using a combination of micro-data from household surveys, and macro-data from the International Comparisons Project. Estimation is undertaken in a manner that reconciles these two sources of information, explicitly recognizing that per capita national demands are an aggregation of the disaggregated, individual household demands. The second innovation relates to a methodology for post-estimation calibration of the global demand system, giving rise to country specific demand systems and an associated expenditure function which, when aggregated across the expenditure distribution, reproduce observed per capita budget shares exactly. The third innovation is use of the calibrated expenditure function to calculate the change in the head-count of poverty, poverty gap and squared poverty gap arising from policy reforms, where the poverty measures are derived using a unique poverty level of utility, rather than an income or expenditure-based measure. We employ these techniques with a demand system for food, other non-durables and services estimated using a combination of 1996 ICP data set and national expenditure distribution data. Calibration is demonstrated for three countries for which household survey expenditure data are utilized during estimation; namely, Indonesia, the Philippines and Thailand. To illustrate the usefulness of these calibrated models for policy analysis, we assess the impacts of an assumed five percent food price rise as might be realized in the wake of a multilateral trade agreement. Results illustrate the important role of subsistence expenditures at low per capita income levels, but of discretionary expenditure at higher per capita income levels. The welfare analysis underscores the relatively large impact of the price hike on poorer households, while a modified Foster-Greer-Thorbecke poverty measure shows that the five percent price rise has a differential effect on poverty across the three focus countries, although it increases the incidence and intensity of poverty in all three cases.

Suggested Citation

  • Cranfield, J.A.L. & Preckel, Paul V. & Hertel, Thomas W., 2006. "Poverty Analysis Using An International Cross-Country Demand System," Working papers 283452, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
  • Handle: RePEc:ags:pugtwp:283452
    DOI: 10.22004/ag.econ.283452
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/283452/files/34.pdf
    Download Restriction: no

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. ., 2012. "Socio-economic impact of regional transport infrastructure in the Greater Mekong Subregion," Chapters, in: Biswa Nath Bhattacharyay & Masahiro Kawai & Rajat M. Nag (ed.),Infrastructure for Asian Connectivity, chapter 4, pages 95-138, Edward Elgar Publishing.
    2. Will Martin & Kym Anderson, 2008. "Agricultural trade reform under the Doha Agenda: some key issues ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 1-16, March.
    3. Stone, Susan & Strutt, Anna & Hertel, Thomas, 2010. "Assessing Socioeconomic Impacts of Transport Infrastructure Projects in the Greater Mekong Subregion," ADBI Working Papers 234, Asian Development Bank Institute.
    4. Verma, Monika & Hertel, Thomas W. & Preckel, Paul V., 2011. "Predicting within country household food expenditure variation using international cross-section estimates," Economics Letters, Elsevier, vol. 113(3), pages 218-220.
    5. Nicole Hassoun, 2010. "Another Mere Addition Paradox? Some Reflections on Variable Population Poverty Measurement," WIDER Working Paper Series 120, World Institute for Development Economic Research (UNU-WIDER).
    6. Paul Preckel & J. A. L. Cranfield & Thomas Hertel, 2010. "A modified, implicit, directly additive demand system," Applied Economics, Taylor & Francis Journals, vol. 42(2), pages 143-155.
    7. World Bank, 2013. "Nicaragua Agriculture Public Expenditure Review [Nicaragua - Análisis del gasto público agropecuario y forestal]," World Bank Other Operational Studies 21542, The World Bank.

    More about this item

    Keywords

    Food Security and Poverty;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:283452. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/gtpurus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.