The Impact of Food Inflation on Urban Poverty and Its Monetary Cost : Some Back-of-the-Envelope Calculations

This paper uses a sample of 73 developing countries to estimate the change in the cost of alleviating urban poverty brought about by the recent increase in food prices. This cost is approximated by the change in the poverty deficit, that is, the va...

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Bibliographic Details
Main Authors:	Dessus, Sébastien, Herrera, Santiago, de Hoyos, Rafael
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING AGRICULTURAL ACTIVITIES AGRICULTURAL YIELDS AGRICULTURE BANK POLICY BULLETIN CASH TRANSFERS CHANGES IN POVERTY CLIMATE CHANGE COMMODITY PRICE COMMODITY PRICES CONSUMER PRICE INDEX CONSUMPTION BASKET DEFICITS DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT POLICY DOMESTIC MARKETS DOMESTIC PRICES ECONOMIC DEVELOPMENT EXCHANGE RATES EXPENDITURE EXTREME POVERTY EXTREME POVERTY LINE FARMERS FINANCIAL CRISIS FOOD CONSUMPTION FOOD CONSUMPTION PATTERNS FOOD DEMAND FOOD ITEMS FOOD PRICE FOOD PRICE INFLATION FOOD PRICES FOOD SHARE FOOD-FOR-WORK GROSS DOMESTIC PRODUCT HOUSEHOLD BUDGET HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HOUSEHOLD WELFARE HUMAN DEVELOPMENT IMPACT ON POVERTY INCIDENCE OF POVERTY INCOME INCOME DISTRIBUTION INCOME LEVEL INCOME LEVELS INTERNATIONAL BANK INTERNATIONAL MARKETS INTERNATIONAL TRADE MARKET PRICES MARKET STRUCTURES MEASUREMENT OF POVERTY MILLENNIUM DEVELOPMENT GOAL NEW POOR POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLICY RESPONSE POOR POOR HOUSEHOLDS POVERTY ALLEVIATION POVERTY GAP POVERTY IMPACT POVERTY LEVELS POVERTY LINE POVERTY LINES POVERTY POVERTY POVERTY RATE POVERTY RATES POVERTY THRESHOLD PRICE CHANGE PRICE CHANGES PROGRESS PURCHASING POWER RESPECT RURAL RURAL AREAS RURAL HOUSEHOLDS RURAL POPULATION RURAL POVERTY RURAL WELFARE SOCIAL UNREST TARGETED TRANSFER PROGRAMS TARGETING TARGETING MECHANISMS URBAN AREAS URBAN POPULATION URBAN POVERTY VULNERABLE HOUSEHOLDS
Online Access:	http://documents.worldbank.org/curated/en/2008/07/9670245/impact-food-inflation-urban-poverty-monetary-cost-some-back-of-the-envelope-calculations http://hdl.handle.net/10986/6849

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Summary:	This paper uses a sample of 73 developing countries to estimate the change in the cost of alleviating urban poverty brought about by the recent increase in food prices. This cost is approximated by the change in the poverty deficit, that is, the variation in financial resources required to eliminate poverty under perfect targeting. The results show that, for most countries, the cost represents less than 0.1 percent of gross domestic product. However, in the most severely affected, it may exceed 3 percent. In all countries, the change in the poverty deficit is mostly due to the negative real income effect of those households that were poor before the price shock, while the cost attributable to new households falling into poverty is negligible. Thus, in countries where transfer mechanisms with effective targeting already exist, the most cost-effective strategy would be to scale up such programs rather than designing tools to identify the new poor.

The Impact of Food Inflation on Urban Poverty and Its Monetary Cost : Some Back-of-the-Envelope Calculations

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