Prices, Engel Curves, and Time-Space Deflation: Impacts on Poverty and Inequality in Vietnam

51 Pages Posted: 13 Jun 2017

See all articles by John Gibson

John Gibson

University of Waikato; Motu Economic and Public Policy Research

Trinh Le

Motu Economic and Public Policy Research Trust

Bonggeun Kim

Seoul National University

Date Written: June 9, 2017

Abstract

Many developing countries lack spatially disaggregated price data. Some analysts use "no-price" methods by using a food Engel curve to derive the deflator as that needed for nominally similar households to have equal food shares in all regions and time periods. This method cannot be tested in countries where it is used as a spatial deflator since they lack suitable price data. In this paper, data from Vietnam are used to test this method against benchmarks provided by multilateral price indexes calculated from repeated spatial price surveys. Deflators from a food Engel curve appear to be a poor proxy for deflators obtained from multilateral price indexes. To the extent that such price indexes reliably compare real living standards over time and space, these results suggest that estimates of the level, location, and change in poverty and inequality would be distorted if the Engel method deflator was used in their stead.

Keywords: Inequality

Suggested Citation

Gibson, John and Le, Trinh and Kim, Bonggeun, Prices, Engel Curves, and Time-Space Deflation: Impacts on Poverty and Inequality in Vietnam (June 9, 2017). World Bank Policy Research Working Paper No. 8097, Available at SSRN: https://ssrn.com/abstract=2985524

John Gibson (Contact Author)

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Motu Economic and Public Policy Research

19 Milne Terrace
Island Bay
Wellington, 6002
New Zealand

Trinh Le

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Bonggeun Kim

Seoul National University ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)

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