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The Making of Pro‐Poor Growth
Author(s) -
Carmignani Fabrizio
Publication year - 2011
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/j.1467-9485.2011.00563.x
Subject(s) - economics , poverty , inequality , poverty reduction , sharpening , virtuous circle and vicious circle , development economics , economic inequality , macroeconomics , economic growth , mathematics , mathematical analysis , computer science , computer vision
A system of three endogenous equations is used to estimate the determinants of poverty dynamics. The system incorporates: (i) the direct effect of growth and income inequality on poverty, (ii) the feedback effect of poverty on inequality and growth, and (iii) different channels through which economic policies can contribute to poverty reduction. Results suggest that countries tend to move towards one of two possible equilibria. The positive (virtuous) equilibrium is characterized by fast growth, decreasing inequality, and rapid poverty reduction. The negative (vicious) equilibrium involves slow (or even negative) growth, sharpening inequalities, and resilient poverty. The policy mix is critical in determining to which of the two equilibria a country converges.