Macroeconomic instability has been increasingly considered as a factor lowering average income growth and, in this way, is a factor slowing down poverty reduction. But it can also result in slower poverty reduction for a given average rate of growth, due to poverty traps, often examined at the microeconomic level. Testing a model of poverty change on a panel of data for more than 80 countries from 1981 to 2005, we find that income instability results in a lower poverty reduction for a given growth. It reflects a distributional effect not fully captured by a change in the Gini coefficient.
Guillaumont, P.; Korachais, C. When Unstable, Growth Is Less Pro-Poor. UNU-WIDER, Helsinki, Finland (2010) 27 pp. ISBN 978-92-9230-315-0 [WIDER Working Paper No. 2010/77]