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Inflation Inequity and the Measurement of Pro-Poor Growth

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  • Grimm, Michael
  • Günther, Isabel

Abstract

Despite the recent and intense debate on how to define and measure pro-poor growth, there is one important issue which has so far not received sufficient attention: how applications of pro-poor growth measurements can appropriately take into account relative price changes, which, given the heterogeneity of consumption patters across the income distribution, often lead to significant inflation inequality. We show that incorporating inflation inequality into pro-poor growth measurements is not only a methodological necessity but if ignored can seriously bias assessments of the pro-poorness of growth. Using household expenditure surveys, we suggest simple methodologies which are able to redress such biases and appropriately reflect the changes of relative prices and the development of the purchasing power of the poor in pro-poor growth measurements. Empirically, we illustrate our concepts for the case of Burkina Faso using growth incidence curves and poverty change decompositions as pro-poor growth measurements.

Suggested Citation

  • Grimm, Michael & Günther, Isabel, 2005. "Inflation Inequity and the Measurement of Pro-Poor Growth," Proceedings of the German Development Economics Conference, Kiel 2005 17, Verein für Socialpolitik, Research Committee Development Economics.
  • Handle: RePEc:zbw:gdec05:3490
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    More about this item

    Keywords

    Pro-Poor Growth; Differential Inflation; Burkina Faso;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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