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Unformatted text preview: make the periods of greatest decline stand out from the other periods. 61 62 Potential Impact of the Current Worldwide Recession on Poverty in LAC This note analyzes the potential impact on poverty in two ways: a) By describing what have been the changes in poverty during previous downturns; and b) By estimating elasticities of poverty reduction with respect to changes in per capita GDP and using those elasticities, together with projected growth rates to estimate likely changes in poverty rates and the number of poor. All of this analysis is subject to the very strong caveat that we may be facing a situation that represents something very different from what has been faced in the past. While there have certainly been periods of negative per capita GDP growth in many LAC countries at the same time (mainly during the first half of the 1980s), this has not ever happened after a period of universal good growth and fast poverty reduction. Whereas previous periods of negative growth in per capita GDP over the last 25 years have usually been triggered by changes in developing countries, the current period has been triggered by events in industrialized countries. While many countries had entered into previous periods of negative growth in per capita GDP with public sector deficits, macroeconomic balances in most –not all‐ LAC countries around the end of 2008 had been strong, which gives some countries room to implement countercyclical policies. Finally, some of the factors that appear to have contributed to the recent significant gains in poverty between 2002 and 2008 (expansion of conditional cash transfers, greater effectiveness of some public transfer programs, and rising remittances) were either not present or at much lower levels during periods of previous downturns. Changes in Poverty During Previous Downturns Unfortunately, it is not possible to analyze what happened to poverty during all periods of negative growth in per capita GDP because poverty data are not collected annually in many countries in the region. Moreover, there is far less poverty data available during the 1980s, when there were many periods of crises. The analysis presented in this section makes use of all available data on poverty, taken from the SEDLAC data bank of comparable LAC household surveys.101 The SEDLAC database contains data on poverty reported by national statistical agencies and calculated on the basis of national poverty lines. These data are used in this exercise instead of the POVCALNET World Bank poverty data (where poverty is measured using international poverty lines) because the SEDLAC data have more observations on poverty over consecutive years. This ensures that periods of changes in poverty can be matched to periods of negative growth in per capita GDP. Figure 9 presents information on how poverty has changed for all the periods of negative per capita GDP growth ‐ for which poverty data are available (34 in total). Note that 101 See www.depeco.econo.unlp.edu.ar/cedlas/sedlac/ SEDLAC is a joint initiative between the Centro de Estud...
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