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

54 Pages Posted: 12 Sep 2008

See all articles by Marcos Chamon

Marcos Chamon

International Monetary Fund (IMF) - Research Department

Irineu de Carvalho Filho

International Monetary Fund (IMF)

Date Written: August 2008

Abstract

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.

Keywords: Brazil, Mexico, Data analysis, Economic reforms, Income, Private consumption, Consumer prices, Deflation, Economic models, Economic policy, Working Paper

Suggested Citation

Chamon, Marcos and de Carvalho Filho, Irineu, The Myth of Post-Reform Income Stagnation: Evidence from Brazil and Mexico (August 2008). IMF Working Paper No. 08/197, Available at SSRN: https://ssrn.com/abstract=1266530

Marcos Chamon (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-5867 (Phone)

Irineu De Carvalho Filho

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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