Barja, Gover and Monterrey, Javier and Villarroel, Sergio (2004): Bolivia: Impact of shocks and poverty policy on household welfare.
Download (886kB) | Preview
This paper evaluates the short term impacts on poverty of pro-poor expenditure and total social expenditure during the 1999-2002 period of Bolivian economic recession. Observed characteristics of recession are simulated by the combined effects of negative terms of trade shock, reduction in foreign saving flows and low output growth. Evaluation is performed by simulating the impacts of shocks and social expenditures in an environment of low growth: i) on macro aggregates of consumption, income, saving and prices (based on a simple static 1-2-3 model built with 1998 data as the base year), ii) on household income and consumption levels by quintiles and areas, and iii) on consumption based poverty indicators by areas. The following were main results from experiments: The terms of trade shock had greater negative impact on household income then reduction in foreign saving flows. In contrast, reduction in foreign saving flows had greater negative impact on household consumption then the terms of trade shock. Poverty measured by the head count ratio has been greater from reduction in foreign saving flows then from the terms of trade shock. Poverty measured by the poverty gap and poverty intensity has concentrated in rural areas, being greater from reduction in foreign saving flows then from the terms of trade shock. Under macroeconomic stability (no shocks and 1998 macro conditions) social expenditure policy for poverty reduction would have had an important positive impact on household income and consumption levels (more so in income then consumption), in reducing the number of poor (more in urban then rural areas), and in reducing poverty gap and poverty intensity (more so in rural areas). However, social expenditure policy does not promote the production of tradables. The combined positive effects from observed social expenditure policy and effort in an environment of low output growth, did not compensate the combined negative impacts from the experienced terms of trade shock and reduction in foreign saving flows. These conclusions show that under macroeconomic disequilibrium poverty reduction efforts become policies of poverty containment or safety net programs. Poverty reduction is a long term objective that requires long term commitment for an environment on macroeconomic stability.
|Item Type:||MPRA Paper|
|Original Title:||Bolivia: Impact of shocks and poverty policy on household welfare|
|English Title:||Bolivia: Impact of shocks and poverty policy on household welfare|
|Keywords:||External Shocks; Poverty; CGEM 1-2-3; HEGY|
|Subjects:||C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models
D - Microeconomics > D1 - Household Behavior and Family Economics > D10 - General
C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General
|Depositing User:||Gover Barja|
|Date Deposited:||28. May 2010 12:31|
|Last Modified:||30. Dec 2015 10:55|
Andersen, Lykke. (2003). Baja movilidad social en Bolivia: Causas y consecuencias para el desarrollo. Latin American Journal for Economic Development: No.1, September 2003. IISEC, Universidad Católica Boliviana.
Barja, Gover; McKenzie David and Miguel Urquiola. (2004). Capitalization and privatization in Bolivia: An approximation to an evaluation. In Reality Check: Assessing the Distributional Impact of Privatization. John Nellis y Nancy Birdsall, Editors. Washington DC: The Center of Global Development Publisher. Forthcoming.
Barja, Gover and Miguel Urquiola. (2003). Capitalization, regulation and the poor: access to basic services in Bolivia. In Utility Privatization and Regulation: A fair deal for consumers? Catherine Waddams Price y Cecilia Ugaz, Editors. The World Institute for Development Economics Research. Edward Elgar Publishing, UK.
Barja, Gover; Monterrey Javier and Sergio Villarroel (2003). The elasticity of substitution in demand for non-tradables goods in Bolivia. The Latin American and Caribbean Research Network, IADB.
Bolivia: Social and Demographic Characteristic of Indigenous People. (2003). INE and United Nations.
ECLAC (2004). Foreign investment in Latin America and the Caribbean. United Nations (in Spanish).
Deaton Angus and Zaidi Salman. (2002). Guidelines for constructing consumption aggregates for welfare analysis. Living Standard Measurement Study. Working paper Nº 135. World Bank. Washington. U.S.A.
Deaton Angus. (1997). The analysis of household surveys: A microeconometric approach to development policy. The johns Hopkins University Press. U.S.A.
Devarajan, Shantayanan and Delfin S. Go (2002). The 123PRSP Model. In Techniques and Tools for Evaluating the Poverty Impact of Economic Policy, Chapter 13, World Bank, 2002.
Devarajan, Shantayanan, Jeffrey D. Lewis, and Sherman Robinson. (1990). Policy Lessons From Two sector Models. Journal of Policy Modelling 12 (4): 625-657.
Devarajan, Shantayanan, Go Delfin S., Lewis Jeffrey D., Robinson Sherman and Sinko Pekka. (1997). Simple General Equilibrium Modelling. In Joseph François and Kenneth Reinert (eds), “Applied Methods for Trade Policy Analysis: A Handbook”. Cambridge: Cambridge University Press.
Devarajan, Shantayanan, Jeffrey D. Lewis, and Sherman Robinson. (1993). External Shocks, Purchasing Parity Power and The Equilibrium Real Exchange Rate. World Bank Economic Review 7:45-63.
Foster James, Greer Joel and Thorbecke Erik. (1984). A class of decomposable poverty measures. Econometrica. Vol. 52. Issue 3. pages 761 – 766..
Gamarra, Eduardo. (2003). Conflict vulnerability assessment Bolivia. Latin American and the Caribbean Center, Florida International University.
Garrón, Mauricio; Katherina Capra and Carlos Machicado. (2003). Privatization in Bolivia: the impact of firm performance. The Latin American and Caribbean Research Network, IADB.
Jemio, Luis Carlos and Manfred Wiebelt. (2001). ¿Existe espacio para políticas anti-shocks en Bolivia? Latin American Journal of Economic Development: No. 1, September 2003. IISEC, Universidad Católica Boliviana.
Lanjouw Jean Olson and Lanjouw Peter. (1997). Poverty Comparisons with non-compatible data. Policy Research Working Paper 1709. World Bank. Washington.
Medina Fernando. (2002). Equivalence Scales: A brief review of concepts and methods. Economic Commission for Latin America and the Caribbean. Third Meeting of the Expert Group on Poverty Statistics (Rio Group). Lisbon.
Poverty and Inequity by Bolivian Municipal areas: Estimation of Consumption Expenditure by Combining the 2001 Census and Household Surveys. (2003). INE, UDAPE and World Bank.
Republic of Bolivia. (2001). Poverty Reduction Strategy Paper (PRSP). Unidad de Análisis de Políticas Sociales y Económicas (2003). Estrategia Boliviana de Reducción de la Pobreza: Informe de Avance y Perspectivas.
Sen Amartya. (1976). Poverty an ordinal approach to measurement. Econometrica. Vol. 44. Issue 2. pp 219 – 231.
Spatz, Julius. (2003). The impact of structural reform on wages and employment: the case of formal versus informal workers in Bolivia. Latin American Journal of Economic Development: No.2, April 2004. IISEC, Universidad Católica Boliviana.
Steward Frances. (2003). The implications for chronic poverty of alternative approaches to conceptualizing poverty. Department of Financial International Development (DFID). England.
Thiele, Rainier and Manfred Wiebelt. (2003). Attacking poverty in Bolivia – Past evidence and future prospects: Lessons from a CGE analysis. Working Paper 6/2003, IISEC, Universidad Católica Boliviana.
UDAPE. (1993). Ajuste structural y crecimiento económico: Evaluación y perspectivas del caso Boliviano. Serie Estabilización y Reforma Estructural. CIEDLA y Fundación Konrad Adenauer.
World Bank. (1993). Poverty Reduction Handbook. Washington. U.S.A.
World Bank. (2003). Poverty Manual. Washington. U.S.A.