Crises and the Poor: Socially Responsible Macroeconomics

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dc.contributor.author Lustig, Nora en
dc.description.abstract This paper presents evidence on the impact of economic crisis on poverty and inequality in Latin America. Crises not only result in higher poverty rates but also may cause irreversible damage to the human capital of the poor. In light of this evidence, the author concludes that crisis avoidance and a pro-poor response to crisis should be a major component of a poverty reduction strategy. As a result, the paper analyses the role of exchange rate policy, capital controls and countercyclical fiscal policy in generating or avoiding crisis. Responses to macroeconomic crisis are assessed by considering the effects of different policy combinations, the use of safety nets and the composition of fiscal adjustment to protect the income of the poor in the face of macroeconomic adjustment. The main lesson is that socially responsible macroeconomic policy can protect the poor during times of crisis and simultaneously contribute to lower chronic poverty. en
dc.subject Poverty en
dc.subject Economics en
dc.title Crises and the Poor: Socially Responsible Macroeconomics en
dc.contributor.other WALESKAG
dc.date.accessioned 2011-07-29T14:55:59Z
dc.date.available 2011-07-29T14:55:59Z
dc.date.issued 2000-02
dc.identifier.uri http://www.iadb.org/en/publications/publication-detail,7101.html?id=18762
dc.format.extent 36
dc.format.medium ACROBAT
dc.language.iso en
dc.subject poverty; inequality; social reponsibility; macroeconomics
dc.type Technical Notes
lacea.language.supported en
dc.date.modified 2016-08-31T16:26:34Z
dc.description.abstract2 Economic insecurity is one of the most urgent concerns for both the poor and nonpoor in Latin America and the Caribbean. Economic insecurity is caused by a variety of adverse shocks, including idiosyncratic shocks such as unemployment and illness, and aggregate shocks like natural disasters. This study focuses on one particularly important aggregate shock: macroeconomic crises. Macroeconomic crises, which have been all too common in the region's recent history, are the single most important cause of rapid increases in poverty and are often accompanied by increasing inequality. Crisis prevention and response policies have in general not paid adequate attention to the impact on poverty of crises and policy decisions. When policies have considered the needs of the poor, all too often they have been hampered by weak institutional capacity. This paper analyzes the components of a "pro-poor" response to macroeconomic crises. In particular, it outlines the appropriate policy instruments to respond to crises when they do occur. Highlighted in the study is the need for pre-existing and adequately funded safety nets.

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