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The Myth of Post-Reform Income Stagnation in Brazil

Author/Editor: Carvalho Filho, Irineu E. | Chamon, Marcos
Authorized for Distribution: December 1, 2006
Electronic Access: Free Full Text (PDF file size is 669KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper uses Engel curves to estimate real income growth in Brazil. The estimated per capita household real income growth in metropolitan areas during 1987-2002 is about 4½ percent per year, well above the "headline" growth of 1½ percent obtained by deflating nominal incomes by the CPI. This suggests a substantial CPI bias during that period, likely owing to one-off effects of trade liberalization and inflation stabilization. The estimated unmeasured gains are higher for poorer households, implying a marked reduction in "real" inequality. This finding challenges the conventional wisdom that post-reform real income growth in Brazil was low.
 
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Series: Working Paper No. 06/275
Subject(s): Income | Brazil | Trade liberalization | Inflation | Economic stabilization | Economic reforms | Consumer price indexes
Author's keyword(s): CPI bias | trade liberalization | inflation stabilization | economic reform
 
English  
    Published:   December 1, 2006        
    ISBN/ISSN:   0 / 1934-7073   Format:   Paper
    Stock No:   WPIEA2006275   Pages:   34
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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