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Stabilizing Poverty In The Context Of The IMF's Monetary Model

Author

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  • Chand, Sheetal K.

    (Dept. of Economics, University of Oslo)

Abstract

The IMF monetary model focuses on the balance of payments. This paper adds a poverty stabilization objective to it. Drawing on statistical income distribution theory, key aspects of the head count poverty indicator are introduced. The resulting model reproduces traditional balance of payments policy prescriptions, while showing their implications for the incidence of poverty. A balance of payments-poverty tradeoff relationship is derived. This facilitates analysis of pre-emptive policies that can stabilize the incidence of poverty when undertaking balance of payments adjustment, thereby reducing the need for costly alleviation. The suggested approach is illustrated in the context of Mexico’s 1995 stabilization episode.

Suggested Citation

  • Chand, Sheetal K., 2003. "Stabilizing Poverty In The Context Of The IMF's Monetary Model," Memorandum 14/2003, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2003_014
    as

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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2003/Memo-14-2003.pdf
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    References listed on IDEAS

    as
    1. International Monetary Fund, 1987. "Theoretical Aspects of the Design of Fund-Supported Adjustment Programs," IMF Occasional Papers 1987/007, International Monetary Fund.
    2. Giovanni Andrea Cornia & Sampsa Kiiski, 2001. "Trends in Income Distribution in the Post-World War II Period: Evidence and Interpretation," WIDER Working Paper Series DP2001-89, World Institute for Development Economic Research (UNU-WIDER).
    3. J. J. Polak, 1957. "Monetary Analysis of Income Formation and Payments Problems," IMF Staff Papers, Palgrave Macmillan, vol. 6(1), pages 1-50, November.
    4. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    5. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657, Elsevier.
    6. Kakwani, Nanak, 1993. "Poverty and Economic Growth with Application to Cote d'Ivoire," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(2), pages 121-139, June.
    7. Martin Ravallion & Gaurav Datt, 1996. "India's Checkered History in Fight against Poverty: Are There Lessons for the Future?," Monash Economics Working Papers archive-33, Monash University, Department of Economics.
    8. Nanak Kakwani, 1993. "Poverty And Economic Growth With Application To Côte D'Ivoire," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(2), pages 121-139, June.
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    Cited by:

    1. Sheetal K. Chand, 2004. "Macroeconomics - Which Way Now? Old versus New Styles," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 30, pages 11-26.

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    More about this item

    Keywords

    Poverty incidence; IMF monetary model; stabilization policy;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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