Problem Set For Economic Development
1. Introduction
a) Skim the introductory section (“Summary and Key Messages”) of the 2004 World Bank poverty assessment report (available on iLearn).
What are 3 important policy recommendations it makes regarding poverty and inequality? Write 2-3 sentences describing each recommendation you list.
2. Poverty
a) Calculate the mean per capita consumption in each of the two years and compute the annual growth rate (fill in table).
How did consumption change over the period? Write 2-3 sentences describing and interpreting your results.
b) Calculate the P0 and P1 indicators for each year (fill in table). Calculate the annual rate of change in P0 (fill in table).
How did poverty rates and the depth of poverty change over the period? Write 3-4 sentences describing and interpreting your results.
c) Graph the poverty profiles for the two years on a single figure. Use different colors for the two years, and define these in a legend. Include the poverty line (z) on the graph as well. (paste graph into your group results)
By examining the poverty profiles visually, you can infer what happened to the P2 “severity of poverty” index. Explain in 3-4 sentences what happened to the P2 index and how that can be inferred from the graph.
3. Inequality
a) Calculate the 20/20 Kuznet’s Ratio for each year. (fill in table)
What happened to inequality over time as measured by the 20/20 Kuznet’s ratio? Write 2-3 sentences explaining and interpreting your results.
b) Graph the Lorenz curve for each of the two years on a single figure. (paste graph into your group results)
Explain how you can infer the change in the Gini coefficient from the graph above. Did it get bigger or smaller? Is that more or less inequality? Write 2-3 sentences explaining and interpreting your results.
4. Discuss your findings addressing the following questions (1 paragraph each)
a) Was growth in average per capita consumption associated with poverty reduction?
b) Was growth in per capita consumption associated with a change in inequality?
c) Choose one result from this exercise (a number, a graph, a fact) that you found interesting. What did you learn from it and/or why is it interesting to you?
1998 | 2010 | Annual growth rate |
991.21 | 1642.77 | 5.06% |
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