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Why We Don't See Poverty Convergence: The Role of Macroeconomic Volatility

SSRN Electronic Journal
2013
  • 11
    Citations
  • 1,250
    Usage
  • 6
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    11
    • Policy Citations
      11
      • Policy Citation
        11
  • Usage
    1,250
    • Abstract Views
      1,156
    • Downloads
      94
  • Captures
    6
  • Ratings
    • Download Rank
      565,901

Article Description

Martin Ravallion ("Why Don't We See Poverty Convergence?" American Economic Review, 102(1): 504-523; 2012) presents evidence against the existence of poverty convergence in aggregate data despite the conditional convergence of per capita income levels and the close linkage between growth and poverty reduction in standard neoclassic growth theory and associated empirics. In this contribution we address this puzzle. After showing some evidence of regional convergence, we demonstrate that macroeconomic volatility prevents countries with a higher incidence of poverty from converging in poverty levels to those with less poverty on a global scale. Once volatility is controlled for, the relevant convergence parameter shows the expected negative sign and is robust to various estimation techniques and model specifications. Only if a country’s volatility exceeds a relatively high threshold level, it no longer converges. Similarly, initial poverty only exercises a negative impact on mean (income) convergence in countries where macroeconomic volatility is high.

Bibliographic Details

Jesus Crespo Cuaresma; Stephan Klasen; Konstantin M. Wacker

Elsevier BV

poverty convergence; macroeconomic volatility

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