Inflation and the Poor
32 Pages Posted: 15 Oct 2000
Date Written: May 2000
The poor suffer more from inflation than the rich do, reveals this survey of poor people in 38 countries.
Using polling data for 31,869 households in 38 countries and allowing for country effects, Easterly and Fischer show that the poor are more likely than the rich to mention inflation as a top national concern. This result survives several robustness checks.
Also, direct measures of improvements in well-being for the poor - the change in their share of national income, the percentage decline in poverty, and the percentage change in the real minimum wage - are negatively correlated with inflation in pooled cross-country samples.
High inflation tends to lower the share of the bottom quintile and the real minimum wage - and tends to increase poverty.
This paper - a joint product of Macroeconomics and Growth, Development Research Group, and the International Monetary Fund - is part of a larger effort to study the effects of macroeconomic policies on growth and poverty.
JEL Classification: E310,O110,D310,I300
Suggested Citation: Suggested Citation