Poverty alleviation is typically addressed in financial programming through additive programs that target vulnerable groups but without modifying the underlying stabilization and adjustment targets. Instead, this paper integrates the poverty alleviation objective into the financial programming framework using a well-known poverty index. In consequence, the assessment of trade-offs between competing objectives is facilitated. A simulation demonstrates how the integrated approach can reduce adverse effects on poverty and improve the balance of payments, although at the cost, temporarily, of a higher fiscal deficit and inflation.
International Monetary Fund. External Relations Dept.
Measures of poverty figure prominently in debates on the social impact ofeconomic policies and are now routinely used to design targeted interventions to fight poverty. This, coupled with the prominence given to the UN Millennium Development Goal of halving the poverty rate in the world by 2015 (relative to 1990), highlights the need for close scrutiny of poverty data and measures. At a February 4 IMF Institute seminar, Martin Ravallion, Research Manager in the Development Research Group of the World Bank, reviewed current methods of measuring poverty and discussed their role in the debate over globalization’s impact on poverty and inequality.
The paper suggests an operationally usable framework for the evaluation of growth
inclusiveness—the inclusive growth framework (IGF). Based on the data on growth, poverty,
and inequality, the framework allows for the quantitative assessment of growth inclusiveness.
The assessment relies on the decomposition of the change in poverty into growth, distribution,
and decile effects, which can be calculated using the Distributive Analysis Stata Package
(DASP). Availability of at least two household surveys is the main precondition for the use of
the IGF. The application of the IGF is illustrated with two country cases of Senegal and
Marijn Verhoeven, Mr. Sanjeev Gupta, Mr. Gerd Schwartz, Mr. Calvin A McDonald, Željko Bogetic, and Mr. Christian Schiller
This paper presents a preliminary analysis of the likely social impact of the economic crisis and the reform programs in three Asian countries—Indonesia, Korea, and Thailand. The focus is on likely changes in real consumption expenditures arising from higher inflation and increases in unemployment. The current social policy measures adopted in the reform programs should provide significant social safety nets for the poor. However, if the social impact turns out to be larger than projected, it would be worthwhile to assess cost-effective and efficient alternatives for expanding social safety nets. The paper presents some options that could be considered.
The study examines empirical relationships between income inequality and three features of finance: depth (financial sector size relative to the economy), inclusion (access to and use of financial services by individuals and firms), and stability (absence of financial distress). Using new data covering a wide range of countries, the analysis finds that the financial sector can play a role in reducing inequality, complementing redistributive fiscal policy. By expanding the provision of financial services to low-income households and small businesses, it can serve as a powerful lever in helping create a more inclusive society but—if not well managed—it can amplify inequalities.
Emerging Europe has undergone a major economic transformation over the past 25 years. Most countries experienced initial drops in output during transition, followed by recovery in the second half of the 1990s. The path of transition in the Western Balkans has however been particularly uneven. The effects of transition also seem to have been more traumatic and persistent in the Western Balkans, and nostalgia for the past appears to be more prevalent here than in other former communist regions. Such dissatisfaction has important implications for the political economy of further reforms. This paper aims to inform policy by complementing the analysis of standard macro-level measures of inequality and poverty with a household-level analysis of subjective perceptions of poverty. We find that many more people appear to feel poor than are classified as such using purely income-based measures. Uncertainty, in particular related to expectations of future income and vulnerability to shocks, appears to be a key driver behind this discrepancy.
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.