Arbeitspapier

The poverty macroeconomic policy nexus: Some short-run analytics

The present paper utilises a short-run theoretical macroeconomic model of a small open economy to look at the impact of macroeconomic policies and financial deepening upon poverty through sectoral changes. This is because an expansion in certain sectors may cause greater poverty reduction. The model involves a non-traded and a traded sector on the formal side of the economy. The former is more capital intensive and the latter more unskilled labour intensive. Increased employment in the traded sector is more pro-poor compared to a similar rise in the non-traded sector as the former draws workers out of poverty in the informal sector. The model in our paper analyses short-run effects of devaluation, a rise in the money supply induced by financial deepening, and taxation to discourage non-traded goods consumption. Financial deepening can induce greater output and reduce poverty. Other results are mixed and taxonomic. We also attempt to differentiate between the stylised experiences of East Asia and Latin America. East Asian economies have relied more heavily on labour-intensive manufactured exports, whereas Latin America has had a relatively greater share of capital intensive and natural resource based exports. In recent decades countries in these two regions have had differing experiences in poverty reduction, with poverty arguably declining more in East Asia.

ISBN
9291907634
Language
Englisch

Bibliographic citation
Series: WIDER Research Paper ; No. 2005/75

Classification
Wirtschaft
Open Economy Macroeconomics
Macroeconomic Analyses of Economic Development
Subject
open economy macroeconomics
poverty
macroeconomic policy
East Asia
Latin America
Kleines-offenes-Land
Armut
Wirtschaftspolitik
Theorie
Ostasien
Lateinamerika

Event
Geistige Schöpfung
(who)
Mavrotas, George
Murshed, Syed Mansoob
Event
Veröffentlichung
(who)
The United Nations University World Institute for Development Economics Research (UNU-WIDER)
(where)
Helsinki
(when)
2005

Handle
Last update
10.03.2025, 11:46 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Mavrotas, George
  • Murshed, Syed Mansoob
  • The United Nations University World Institute for Development Economics Research (UNU-WIDER)

Time of origin

  • 2005

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