Martin Ravallion

Urban-rural cost-of-living differentials in a developing economy

Abstract Casual observations suggest that the cost-of-living is substantially greater in urban than rural areas of developing economies, with implications for sectoral welfare comparisons. An AIDS demand model for housing and foodgrains is estimated on a household level data set for Java, after adjusting housing rents for heterogeneity in quality. The retrieved cost function indicates that the cost-of-utility at the urban price vector exceeds its rural value, although the differential has been substantially overestimated in the past. The relative cost of urban living is found to increase as reference rural income increases.

Inpres and Inequality: A Distributional Perspective on the Centre's Regional Disbursements 1

Central government funding of local expenditures under the Inpres programs is a potentially important policy instrument for redressing regional inequalities in Indonesia. This paper examines the implicit distributional objectives underlying Inpres. The scheme is modelled as the outcome of a constrained social choice problem facing the centre. An econometric model of Inpres allocations is used to identify the centres implicit social preferences over alternative regional distributions of consumption. Mild absolute-inequality aversion is revealed, although it is somewhat swamped by province-specific preference factors related to population size and density. No other local welfare indicators appear to influence Inpres allocations. 1 I am grateful to Anne Booth and the Bulletins referees for their comments on this paper, and to Iwan Aziz for a helpful discussion on issues raised here.

Towards a theory of famine relief policy

Abstract This paper examines how famine mortality is related to the distribution of food consumption. A theoretical model is proposed of how individual survival chances are affected by changes in consumption. Uncertainty in survival prospects arises from the errors made by any observer in assessing health at given current consumption. The theory is used to explore two policy issues in famine relief: the choice of budgetary rules for allocating emergency aid, and the case for price stabilization policies during famines. Applications to data for two famines in South Asia suggest that successful price stabilization would have had substantial benefits in reducing mortality.

Trade and stabilization: Another look at British India's controversial foodgrain exports

Abstract In keeping with its avowed policy of promoting free trade, the government of India resisted demands for bans on the export of foodgrains during the numerous severe famines of the late 19th and early 20th centuries. This paper assesses the relevance to India of the arguments made for free trade as a food consumption stabilization policy. An estimate is made of the quantitative effect of external trade in buffering domestic foodgrain consumption from output uncertainty. The results suggest that, while trade did have a stabilizing influence, the effect was small, particularly in the short run. Alternative explanations for this are examined.

On some estimates of an asian savings function

Abstract Recent empirical studies have led many economists to argue that a number of countries in Asia could stimulate savings if they permitted higher rates of interest and accepted less foreign aid. This paper critically examines the econometric basis of these claims. For this purpose, the model specifications found in past work are encompassed within a more general model so that they may be replicated and tested as restricted forms.

Four questions and answers on growth and poverty reduction in India

We look at how India’s rapid growth and structural transformation —the shift rural to urban, and from agriculture to industry and services – is changing the relationship between economic growth and poverty reduction. Using our newlyconstructed dataset of poverty measures for India spanning 60 years, including 20 years since the economic reforms of 1991, we find an acceleration of poverty decline since 1991, despite rising inequality. Post-91 growth was at least as propoor as in the preceding decades. Growth in urban areas and in the secondary and tertiary sectors of the economy drove bulk of the post-91 poverty decline.

Rural indebtedness in the Punjab 1878: Results of a household survey

Abstract A common characterization of the 19th century Punjabi peasant is one of a myopic, extravagant person who, when given easier access to credit, eventually becomes impoverished by debt. However, the empirical support for this view is flimsy. The paper tests for excessive “extravagance” among indebted peasants using a small but remarkably detailed farm-household survey for Rohtak District in 1878. The data set offers little statistically convincing support for the historical stereotype. Estimated saving rates suggest that some peasants would have been vulnerable to recurrent drought, but no more so for those in debt. Nor did indebted households tend to have higher marginal propensities to consume. The diversity in consumption/saving behavior bore little association with indebtedness.