79 2007 argentina bolivia brazil chile colombia

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Unformatted text preview: poor. Using a pessimistic forecast – which, if the recent trend continues will turn rapidly into tomorrow’s mean forecast‐ aggregate poverty rates are estimated to rise by two points generating 13 million additional poor people in 2009. Aggregate extreme poverty rates, under the pessimistic forecast, are estimated to increase 0.94 points, generating an increase of almost 6 million in the number of extreme poor. Annex 1. Construction of regional poverty estimates for Latin America The World Bank has created estimates of regional poverty estimates for Latin America and other regions of the world using PPP $1.25 and $2 a day international poverty lines, corresponding to extreme and moderate poverty. Based on an analysis of the PPP equivalents of national poverty lines, this note argues that using PPP $2 a day for extreme poverty and PPP $4 a day for moderate poverty would be more appropriate for Latin America. 70 The following table presents information on the PPP $ a day equivalent of national extreme poverty lines across countries and over time. These values were obtained by converting the reported local currency poverty lines into PPP equivalents using the PPP Exchange Rates for household consumption from the 2005 International Comparison Program, adjusted for inflation using the national CPI. Source: SEDLAC data base, PPP conversion factors from World Bank POVCALNET It is worth noting that the values of the national extreme poverty lines in PPP terms are quite consistent over time for each country. The average coefficient of variation is 0.07 and there is not a great range in the coefficient of variation across countries. The range extends from 0.01 (Chile) to 0.15 (Honduras). There is more of a variation looking across countries, with the lowest value at 1.04 for Nicaragua and the highest at 2.73 for Mexico. The coefficient of variation across countries is 0.35. The following table presents equivalent values of the PPP $ a day equivalent of national poverty lines, calculated in a similar fashion. 71 Source: SEDLAC data base, PPP conversion factors from World Bank POVCALNET The values are still relatively consistent across time within a country. The average coefficient of variation is 0.06 and the range extends from 0.002 (Panama) to 0.15 (Honduras). However, in terms of the variation across countries, there is considerably greater variation in the national poverty lines in PPP terms across countries in moderate poverty than in extreme poverty. This is because all countries use some variation of a food or caloric based extreme poverty line. After accounting for differences in prices with the PPP adjustment, the remaining differences are due to differences in the combination of food that would yield the minimum requirements. The moderate poverty lines are typically defined by multiplying the extreme poverty line by the inverse Engel coefficient and this varies somewhat more across countries. The observation that there is a considerable range in the national moderate poverty lines in PPP terms implies that comparisons of estimated national poverty rates are potentially misleading. All comparisons of poverty should be made us...
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This document was uploaded on 11/14/2013.

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