Central Data Catalog

Citation Information

Type Working Paper
Title CPI bias and its implications for poverty reduction in Africa
Author(s)
Publication (Day/Month/Year) 2016
URL http://documents.worldbank.org/curated/en/284781481032358665/pdf/WPS7907.pdf
Abstract
International poverty estimates for countries in Africa commonly
rely on national consumer price indexes to adjust
trends in nominal consumption over time for changes in the
cost of living. However, the consumer price index is subject
to various types of measurement bias. This paper uses Engel
curve estimations to assess bias in the consumer price index
and its implications for estimated poverty trends. The results
suggest that in 11 of 16 Sub-Saharan African countries in
this study, poverty reduction may be understated because
of consumer price index bias. With correction of consumer
price index bias, poverty in these countries could
fall between 0.8 and 5.7 percentage points per year faster
than currently thought. For two countries, however, the
paper finds the opposite trend. There is no statistically
significant change in poverty patterns after adjusting for
consumer price index bias for the other three countries.

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