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Poverty, Inequality and Macroeconomic Instability

Author

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  • Ricardo Paes de Barros
  • Carlos Corseuil
  • Rosane Mendonça
  • Maurício Cortez Reis

Abstract

Over the past seventeen years the Brazilian macroeconomic performance has been considerably weaker than in previous decades. Inflation reached unprecedented levels and economic growth declined considerably. Despite the overall perception that macroeconomic performance is closely related to poverty and inequality, very few quantitative estimates are available in Brazil and elsewhere about the relationship between macroeconomic performance and income distribution. In this study we use monthly time series to access the relation between this weak and unstable macroeconomic performance on poverty and inequality. The estimates using aggregated and pooling time series reveal that inflation seems to have little association with inequality and particularly with poverty. However, since the variation in the monthly inflation rate over the past seventeen years has been very substantial, the associated variation of poverty became quite significant. As far as the impact of unemployment is concerned, the estimates indicate relatively weak relation between this variable and poverty or inequality. Finally, time-varying regressions indicate that the major results of this study, although applicable to most of the period analyzed, may not necessarily reflect the current situation. In fact, the time-varying estimates reveal a sharp recent decline in the association between unemployment and poverty or inequality, consistent with the drop in poverty and inequality in 1995, despite a considerably increase in the unemployment rate. There is also evidence that the relation between inflation and poverty or inequality declines as inflation accelerates. Nas últimas duas décadas o Brasil experimentou uma performance macroeconômica muito aquém da registrada para o período imediatamente anterior. A inflação alcançou níveis sem precedentes e o crescimento econômico desacelerou consideravelmente. Apesar da percepção generalizada de que a performance macroeconômica estaria relacionada aos níveis de pobreza e desigualdade, existem poucas estimativas quantitativas sobre esta relação para o Brasil, ou mesmo para qualquer outro país. Neste artigo usamos séries de tempo mensais para estimar a relação entre a performance macroeconômica e os níveis de pobreza e desigualdade no Brasil. As estimativas usando tanto dados agregados como um pooling de séries regionais revelam que a inflação parece estar pouco relacionada com pobreza e desigualdade. No entanto, quando se leva em consideração que a variação na taxa mensal de inflação foi bastante alta, mostra-se que as variações correspondentes nos níveis de pobreza e desigualdade são significativos. Com relação ao desemprego as estimativas indicam uma tênue relação desta variável com pobreza e desigualdade. Finalmente, quando se considera a possibilidade de estas relações estimadas variarem ao longo do período analisado, foi identificada uma mudança nas estimativas relacionadas ao período mais recente (pós-real). De fato, a relação entre desemprego e pobreza ou desigualdade se torna bem mais tênue no final do período, o que parece consistente com a queda da pobreza observada a partir de 1995 quando o desemprego assume uma trajetória ascendente. Também há evidências de que a relação entre inflação e pobreza ou desigualdade é mais fraca nos períodos de aceleração inflacionária.

Suggested Citation

  • Ricardo Paes de Barros & Carlos Corseuil & Rosane Mendonça & Maurício Cortez Reis, 2015. "Poverty, Inequality and Macroeconomic Instability," Discussion Papers 0093, Instituto de Pesquisa Econômica Aplicada - IPEA.
  • Handle: RePEc:ipe:ipetds:0093
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    Cited by:

    1. Arabage, Amanda Cappellazzo & Souza, André Portela Fernandes de, 2015. "Labor earnings dynamics in post-stabilization Brazil," Textos para discussão 390, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    2. Arbache, Jorge Saba, 2004. "Do Structural Reforms always Succeed? Lessons from Brazil," WIDER Working Paper Series 058, World Institute for Development Economic Research (UNU-WIDER).

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