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Macroeconomic Fundamentals of Poverty and Deprivation: an empirical study for developed countries


  • Duarte Guimarães

    () (Faculdade de Economia, Universidade do Porto)

  • Ana Paula Ribeiro

    () (CEF.UP. and Faculdade de Economia, Universidade do Porto)

  • Sandra Tavares Silva

    () (CEF.UP. and Faculdade de Economia, Universidade do Porto)


This study aims at providing a positive contribution to the literature on the macroeconomic determinants of poverty which is particularly relevant since this type of analysis is rather scarce (e.g., Agénor, 2005). After a brief review on the macroeconomic mechanisms of poverty and deprivation, we propose a composite poverty index that captures seven deprivation dimensions which, relying on the literature and data availability, are important to a comparative assessment of deprivation across developed countries. The sample includes 24 countries of the European Union, from 2005 to 2010. Moreover, relying on the macroeconomic transmission mechanisms that influence poverty, a panel data econometric approach is implemented in order to study the relation between the proposed composite index and macroeconomic variables. The analysis is also extended for the AROPE, the European headline indicator for poverty targeting. Results show that a multidimensional poverty concept is relevant for assessing deprivation in developed countries and that, in line with the relevant literature, the dynamics of some macroeconomic variables is crucial to deprivation performances. The latter result is robust as it holds for different measures of poverty.

Suggested Citation

  • Duarte Guimarães & Ana Paula Ribeiro & Sandra Tavares Silva, 2012. "Macroeconomic Fundamentals of Poverty and Deprivation: an empirical study for developed countries," FEP Working Papers 460, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:460

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    References listed on IDEAS

    1. Kraay, Aart & Raddatz, Claudio, 2007. "Poverty traps, aid, and growth," Journal of Development Economics, Elsevier, vol. 82(2), pages 315-347, March.
    2. Gundlach, Erich & Paldam, Martin, 2009. "The transition of corruption: From poverty to honesty," Economics Letters, Elsevier, vol. 103(3), pages 146-148, June.
    3. Carlos Farinha Rodrigues & Isabel Andrade, 2012. "Monetary Poverty, Material Deprivation and Consistent Poverty in Portugal," Notas Económicas, Faculty of Economics, University of Coimbra, issue 35, pages 20-39, June.
    4. Aidt, Toke & Dutta, Jayasri & Sena, Vania, 2008. "Governance regimes, corruption and growth: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 195-220, June.
    5. Agénor, Pierre-Richard & Bayraktar, Nihal & El Aynaoui, Karim, 2008. "Roads out of poverty? Assessing the links between aid, public investment, growth, and poverty reduction," Journal of Development Economics, Elsevier, vol. 86(2), pages 277-295, June.
    6. Pierre-Richard Agenor, 2005. "The Macroeconomics Of Poverty Reduction," Manchester School, University of Manchester, vol. 73(4), pages 369-434, July.
    7. Petrakis, P. E. & Stamatakis, D., 2002. "Growth and educational levels: a comparative analysis," Economics of Education Review, Elsevier, vol. 21(5), pages 513-521, October.
    8. Edinaldo Tebaldi & Ramesh Mohan, 2010. "Institutions and Poverty," Journal of Development Studies, Taylor & Francis Journals, vol. 46(6), pages 1047-1066.
    9. Federica Misturelli & Claire Heffernan, 2008. "What is poverty? A diachronic exploration of the discourse on poverty from the 1970s to the 2000s," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(4), pages 666-684.
    10. Anne Epaulard, 2003. "Macroeconomic Performance and Poverty Reduction," IMF Working Papers 03/72, International Monetary Fund.
    11. Marquette, Catherine M., 1997. "Current poverty, structural adjustment, and drought in Zimbabwe," World Development, Elsevier, vol. 25(7), pages 1141-1149, July.
    12. A. Atkinson, 2003. "Multidimensional Deprivation: Contrasting Social Welfare and Counting Approaches," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 1(1), pages 51-65, April.
    13. Ibrahim F. Akoum, 2008. "Globalization, growth, and poverty: the missing link," International Journal of Social Economics, Emerald Group Publishing, vol. 35(4), pages 226-238, March.
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    Cited by:

    1. Andreea Stoian & Rui Henrique Alves, 2012. "Can EU high indebted countries manage to fulfill fiscal sustainability? Some evidence from the solvency constraint," FEP Working Papers 464, Universidade do Porto, Faculdade de Economia do Porto.
    2. Abel L. Costa Fernandes & Paulo R. Mota, 2012. "Triffin’s Dilemma Again and the Efficient Level of U.S. Government Debt," FEP Working Papers 469, Universidade do Porto, Faculdade de Economia do Porto.
    3. Pedro Cosme Costa Vieira, 2012. "A low cost supercritical Nuclear + Coal 3.0 Gwe power plant," FEP Working Papers 461, Universidade do Porto, Faculdade de Economia do Porto.
    4. Ricardo Biscaia & Paula Sarmento, 2012. "Cost inefficiency and Optimal Market Structure in Spatial Cournot Discrimination," FEP Working Papers 462, Universidade do Porto, Faculdade de Economia do Porto.
    5. João Correia-da-Silva & Joana Pinho, 2012. "The profit-sharing rule that maximizes sustainability of cartel agreements," FEP Working Papers 463, Universidade do Porto, Faculdade de Economia do Porto.

    More about this item


    Poverty; Deprivation; Macroeconomic transmission mechanisms; Poverty indexes; Panel data; European Union;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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