Bob Baulch

Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration

Conventional tests for food market integration ask, often misleadingly, whether prices in different locations move together. In this paper an alternative methodology, the parity bounds model (PBM), is developed which uses information on transfer costs in addition to food prices to assess the efficiency of spatial arbitrage. Monte Carlo experiments using data generated by a point-space spatial price equilibrium model show the PBM to be statistically reliable. An application to Philippine rice markets demonstrates that the PBM detects efficient arbitrage when other tests do not. Copyright 1997, Oxford University Press.

Simulating the impact of policy upon chronic and transitory poverty in rural Pakistan

Anti‐poverty programmes often seek to improve their impact by targeting households for assistance according to welfare measures in a single time period. However, a growing literature shows the importance to poor households of fluctuations in their welfare from month to month and year to year. This study uses a five‐year panel of 686 households from rural Pakistan to investigate the magnitude of chronic or transitory poverty making an explicit adjustment for measurement error. The impact of two types of policies (those designed to ‘smooth’ incomes and those designed to promote income growth) on the severity of chronic and transitory poverty is examined. Since the largest part of the squared poverty gap in our sample is transitory, large reductions in poverty can be achieved by interventions designed to ‘smooth’ incomes, but reducing chronic poverty in the long‐term requires large and sustained growth in household incomes. The level and variability of incomes is then modelled as a function of household characteristics, education and assets. The resulting model of the income generation process is used to simulate the impact that a range of transfer and investment policies would have upon chronic and transitory poverty.

Do Monetary and Non-Monetary Indicators Tell the Same Story About Chronic Poverty? A Study of Vietnam in the 1990s

This paper investigates whether monetary and non-monetary indicators tell the same story about chronic poverty using a unique two-period household panel from Vietnam in the 1990s. Using transition matrices and a simple measure of immobility, we find that monetary poverty is less persistent than malnutrition among adults and stunting among children (although there is some evidence of catch-up among stunted children). Monetary poverty is also found to be less persistent than primary and lower secondary school enrollments. Non-parametric tests on common samples reveal that the distributions of all these poverty indicators are different. Furthermore, defining chronic poverty to occur when an individual is monetarily poor, stunted, malnourished or out of school in both waves of the panel, we find the extent of overlap and correlation between the sub-groups of chronically poor is generally quite low. This implies that expanding the number of dimensions used to identify chronic poverty may not lead to greater clarity about the characteristics of chronic poverty.

Being Poor and Becoming Poor: Poverty Status and Poverty Transitions in Rural Pakistan

This paper contrasts the results of conventional poverty status regressions with an alternative approach, the analysis of poverty transitions, using a five-year longitudinal household survey from rural Pakistan. The results show that while the incidence of income poverty in the sample villages was high, turnover among the poor was rapid. Almost 60 percent of households experienced poverty during the five years of the panel but only 35 percent stayed in poverty for two or more years. Only 3 percent of households were poor in all five years of the panel. Furthermore, the correlates of entries and exits from poverty are found to differ in important but unexpected ways from those of poverty status. The policy implications of these findings, if confirmed elsewhere, indicate that targeting antipoverty policies using the characteristics of the currently poor is highly problematic.

Testing for food market integration revisited

This article considers the statistical performance of four commonly used econometric tests for market integration: the Law of One Price, the Ravallion Model, cointegration and Granger causality. A spatial price equilibrium (SPE) model, that is subject to both production shocks and general price inflation, and mimics many of the key characteristics of integrated food markets, is constructed. The model is used to generate food price time series of lengths that are typical of the short sample sizes available in most developing countries, for both instantaneously integrated and independent markets. A series of Monte Carlo experiments on these artificial food price time series are performed, which show that all four of the conventional tests for market integration are statistically flawed.

Ethnic minority development in Vietnam

Abstract This study examines the disparities in living standards between and among the different ethnic groups in Vietnam. Using data from the Vietnam Living Standards Surveys and 1999 Census, we show that ‘majority’ Kinh and Hoa households have substantially higher living standards than ‘minority’ households from Vietnams 52 other ethnic groups. While the Kinh, Hoa, Khmer and Northern Highland Minorities benefited from economic growth in the 1990s, the position of the Central Highland Minorities stagnated. Decompositions show that even if minority households had the same endowments as Kinh households, this would close no more than a third of the gap in their per capita expenditures. While some ethnic minorities seem to be doing well out of a strategy of assimilating with the Kinh-Hoa majority, others groups are attempting to integrate economically while retaining distinct cultural identities, and a third group is largely being left behind by the growth process.

Poverty Mapping with Aggregate Census Data: What is the Loss in Precision?

Spatially disaggregated maps of the incidence of poverty can be constructed by combining household survey data and census data. In some countries (notably China and India), national statistics agencies are reluctant, for reasons of confidentiality, to release household‐level census data, but they are generally more willing to release aggregated census data, such as village‐ or district‐level means. This paper examines the loss in precision associated with using aggregated census data instead of household‐level data to generate poverty estimates. The authors show analytically that using aggregated census data will result in poverty rates that are biased downward (upward) if the rate is below (above) 50%, and that the bias approaches zero as the poverty rate approaches zero, 50%, and 100%. Using data from Vietnam, it is found that the mean absolute error in estimating district‐level poverty rates is 2.5 percentage points if the census data are aggregated to the enumeration‐area level means, and 3–4 percentage points if the data are aggregated to commune or district level. Finally, the authors propose a method for reducing the error using variances calculated from the census. When this approach is applied to the Vietnam data, this method can cut the size of the aggregation errors by around 75%.

Developing a Social Protection Index for Asia

Social protection is increasingly seen as an important tool for poverty reduction, but to date there have been few quantitative cross-country assessments of social protection provision. This article develops a social protection index that systematically and consistently quantifies activities at the national level. Four summary indicators representing the cost, coverage, poverty targeting and impact are scaled and weighted to produce an additive index of the overall level of social protection provision. The index is calculated for six very different Asian countries: Bangladesh, Indonesia, Mongolia, Nepal, Pakistan and Vietnam. Considerable contrasts are revealed between their levels of social protection provision.