The Myth of Post-Reform Income Stagnation: Evidence from Brazil and Mexico

Author/Editor:

Irineu E de Carvalho Filho ; Marcos d Chamon

Publication Date:

August 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2008/197

Subject:

Consumer price indexes Expenditure Household consumption Personal income Public expenditure review

English

Publication Date:

August 1, 2008

ISBN/ISSN:

9781451870558/1018-5941

Stock No:

WPIEA2008197

Pages:

52

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