The myth of post-reform income stagnation: Evidence from Brazil and Mexico

de Carvalho Filho, Irineu and Chamon, Marcos (2011): The myth of post-reform income stagnation: Evidence from Brazil and Mexico.

Abstract

Economic policies are often judged by a handful of statistics, some of which may be biased during periods of change. We estimate the income growth implied by the evolution of food demand and durable good ownership in post-reform Brazil and Mexico, and find that changes in consumption patterns are inconsistent with official estimates of near stagnant incomes. That is attributed to biases in the price deflator. The estimated unmeasured income gains are higher for poorer households, implying marked reductions in “real” inequality. These findings challenge the conventional wisdom that post-reform income growth was low and did not benefit the poor.

• Item Type: MPRA Paper
• Language: English
• Keywords: Household consumption; Measurement Error; CPI Bias; Economic reform; Trade liberalization; Inflation stabilization.
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; E - Macroeconomics and Monetary Economics > E0 - General > E01 - Measurement and Data on National Income and Product Accounts and Wealth ; Environmental Accounts; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I32 - Measurement and Analysis of Poverty

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