Working Papers 2004 – Abstracts
Economic growth and contraction and their impact on the poor
Brett Inder
This paper considers the relationship between growth
in real per capita GDP and the growth in real per capita GDP of the poorest
20% of a country. It uses the data set compiled by Dollar and Kraay (2002),
but come to very different conclusions. We argue that if the purpose is
to answer questions about the impact of growth on the poor, models are
best estimated in growth rates. The empirical results show that growth’s
impact on the poor occurs in two episodes. First, in periods of sustained
economic slowdown (negative growth over a period of at least 5 years),
the poor clearly suffer more than the average. In contrast, where economies
are growing, the poor do not benefit as much as the average. We also find
that the poor benefit from growth less in periods of high inflation, and
in countries with low average income.
Keywords: Economic Growth, Growth and Inequality, Economic Contraction,
Inflation and Growth.
