Imp 14

THE EFFECT OF INFLATION ON POVERTY IN DEVELOPING COUNTRIES:
A PANEL DATA ANALYSIS
by
SHAHIDUR RASHID TALUKDAR, M.S.
A THESIS
in
ECONOMICS
Submitted to the Graduate Faculty

of Texas Tech University in
Partial Fulfillment of
the Requirements for
the Degree of
MASTER OF ARTS
Approved
Dr. Masha Rahnama
Chairperson of the Committee
Dr. Victor Valcarcel
Accepted
Dean of the Graduate School
August, 2012
Copyright 2010, Shahidur Rashid Talukdar
Texas Tech University, Shahidur Rashid Talukdar, August 2012
ACKNOWLEDGEMENTS
I am extremely grateful to Dr. Masha Rahnama for being the Chair of my thesis
committee and also for guiding me throughout the process of conducting empirical
analysis as well as writing the thesis. I would like to thank Dr. Victor Valcarcel for being in
my thesis committee and providing me with relevant ideas, helpful comments, and
suggestions. Last but not the least, I want to thank my wife, Mumtaz B. Laskar, for
helping me with processing the data, and providing me the emotional support to complete
my thesis. Without their help my thesis would not have been complete.
ii
TABLE OF CONTENTS
ACKNOWLEDGEMENTS .................................................................................................. ii
ABSTRACT.............................................................................................................. v
LIST OF TABLES................................................................................................................... vi
INTRODUCTION ............................................................................................................ 1
1.1. MOTIVATION ..................................................................................................... 1

1.2. BACKGROUND.................................................................................................. 1
1.3. RESEARCH OBJECTIVES ................................................................................ 3
LITERATURE REVIEW .................................................................................................. 4
2.1. DEFINITION AND MEASUREMENT OF POVERTY .......................................... 4

2.2. THE STATUS OF POVERTY IN THE WORLD................................................... 5
2.3. POVERTY AND INFLATION .............................................................................. 6
2.4. EFFECT OF INFLATION ON POVERTY: POSITIVE OR NEGATIVE ................ 8
2.5. INFLATION INEQUALITY .................................................................................. 9
2.6. SUMMARY OF THE LITERATURE REVIEW ................................................... 10
RESEARCH METHODOLOGY......................................................................................11
DATA.............................................................................................................................14
4.1. POVERTY DATA.............................................................................................. 15

4.2. CONSUMER PRICE INDEX (CPI) DATA ......................................................... 17
4.3. GROSS DOMESTIC PRODUCT (GDP) PER CAPITA DATA ........................... 17
4.4. EXTERNAL DEBT DATA ................................................................................. 17
4.5. SECONDARY SCHOOL ENROLLMENT RATIO .............................................. 17
4.6. POLITY SCORE ............................................................................................... 18
EMPIRICAL MODELS ...................................................................................................19
RESULTS ......................................................................................................................21
6.1. PANEL LEAST SQUARED MODEL ................................................................. 21

6.1.1. All Countries .............................................................................................. 21
6.1.2. Low Income Countries ............................................................................... 24
6.1.3. Lower Middle Income Countries ............................................................... 26
iii
6.1.4. Upper Middle Income Countries ................................................................ 27

6.2. TESTING THE SIGNIFICANCE OF THE FIXED EFFECTS ............................. 28
6.3. PANEL LEAST SQUARED MODEL WITH COUNTRY FIXED EFFECTS ........ 29
6.3.1. CFE - All Countries.................................................................................... 29
6.3.2. CFEM - Low Income Countries.................................................................. 29
6.4. PERIOD FIXED EFFECTS MODEL ................................................................. 31
6.5. COUNTRY AND PERIOD FIXED EFFECTS MODEL....................................... 32
6.8. DYNAMIC PANEL MODELS ............................................................................ 32
6.8.1. Dynamic Panel Data Analysis (All Countries) ............................................ 35
6.8.2. Dynamic Panel Data Analysis (Low Income Countries) ............................ 35
6.8.3. Dynamic Panel Data Analysis (Lower Middle Income Countries)............... 37
6.8.4. Dynamic Panel Data Analysis (Upper Middle Income Countries)............... 38
6.8.5. Dynamic Panel Data Analysis with Country Fixed Effects.......................... 39
6.8.6. Dynamic Panel Data Analysis with Period Fixed Effects ............................ 39
6.8.7. Dynamic Panel Data Analysis with Country and Period Fixed Effects........ 39
6.9. SUMMARY OF THE RESULTS AND DISCUSSION ........................................ 43
CONCLUSION ..............................................................................................................49
REFERENCES ..............................................................................................................50
APPENDICES
A. WORLD BANK INCOME BASED CLASSIFICATION OF COUNTRIES ...................54
B. DATA SERIES .........................................................................................................56
iv
ABSTRACT
The aim of this thesis is to study the effect of inflation on poverty in developing
countries. I analyze the effect of inflation on poverty with a panel dataset comprised of
115 developing countries over the period 1981 - 2008. The dataset comprises 10
observations for each country as the data is available at 3 year intervals. As previous
studies indicate that poverty is also affected by factors such as income, external debt,
educational attainment, and quality of governance, besides inflation, I take these as
independent variables and poverty as the dependent variable. With the help of regression
analysis, I find evidence supporting the view that inflation in general is positively
correlated with poverty while income, educational attainment, and quality of governance
show negative correlation with poverty in most of the specifications. Apart from the study
of all the countries combined, I separately analyze the effect of inflation on poverty in low
income countries, lower middle income countries, and upper middle income countries to
see whether the effect of inflation is similar or different in countries with different levels of
income. I find that although in most of the cases inflation shows a positive and statistically
significant correlation with poverty, however, in the case of low income countries, the
relationship between inflation and poverty is negative and statistically insignificant under
certain specifications.
v
LIST OF TABLES
1. Summary Statistics 14
2. Countries according to Level of Income 15
3. Descriptive Statistics 16
4. Results from the Panel Least Squared Model 25
5. Results from the Country Fixed Effects Model (CFE) 30
6. Results from the Period Fixed Effects Model (PFE) 33
7. Results from the Country & Period Fixed Effects Model 34
8. Results from the Dynamic Panel Model 36
9. Results from the Dynamic Panel Model with CFE 40
10.Results from the Dynamic Panel Model with PFE 41
11.Results from the Dynamic Panel Model with CFE+PFE 42
12.Summary Results 44
vi
CHAPTER 1
INTRODUCTION
1.1. MOTIVATION
When the prices of essential goods or services rise, it becomes harder for the
poor with a limited budget to be able to afford those goods and services. The limited
purchasing power of the poor shrinks when prices of essential commodities increase but
the income does not increase at the same pace (Wilson, 2011). To quote Wolfgang
Fengler, the World Banks lead economist in Kenya:
Imagine you are spending half of your income on something whose price suddenly
increases by a quarter. Seems impossible? This is how in fact inflation has hit the poor in
many developing countries, especially Kenya... So if you are exposed to high inflation,
there is no choice but to cut down on food or on other expenses, many of which are vital,
such as school fees or health care. This is why inflation is the worst tax on the poor.
(Blog post on Oct 03, 2011, Taxing the poor through inflation, Africa CanEnd Poverty A
World Bank Blog.)
If inflation hurts the poor in Kenya, what about the poor in other countries? Does
inflation hurt the poor everywhere else as well? Can inflation reduce people's
consumption because of higher prices of goods and services? Does that lead to an
increased level of poverty? Is the effect of inflation on poverty similar in all countries or is
it different? Questions such as these motivated me to carry out a study on the effect of
inflation on poverty.
1.2. BACKGROUND
Economists hold diverse opinions about the impact and consequences of inflation
on peoples well-being. Although it is generally accepted that extremely high inflation
rates, such as those during hyperinflation, affect the economy negatively, many
economists contend that low inflation is good for the economy. Howitt (1990), for
instance, argues that although inflation is costly, once it is under way, society is better off
to tolerate a little inflation than to bear the cost necessary to achieve price stability.
Summers (1991) and DeLong and Summers (1992) argue that moderate inflation is good
for the economy. Analyzing similar arguments of a number of economists, Marty and
Thornton (1995) concluded that a group of economists believe that moderate inflation is
good for the economy.
1
Although there may be some economists who would argue that in the long run
inflation does not matter, however, in reality, inflation is a serious concern for common
people, i.e., non-economists. For example, Shiller (1996) found that there was a stark
difference between how common people and economists perceive inflation. Shiller found
that among non-economists, the largest concern with inflation appears to be that it lowers
peoples standard of living. Another study by Easterly and Fischer (2001) confirmed that
inflation concerns the poor more than the rich. Using polling data for 31,869 households
in 38 countries and allowing for country effects, they classify people as poor, average,
and rich through self-categorization. In the survey questionnaire, people classify
themselves as poor, average, or rich by their own standard. From this study, Easterly and
Fischer found evidence supporting the view that inflation is regarded as more of a
problem by the poor than it is by the non-poor and that inflation reduces the relative
income of the poor.
The concern over the role of inflation on poverty has, since then, been increasing.
A study by the Institute for Fiscal Studies (2011) finds that inflation hits poorer families
much harder than the rich in the UK. Similar concerns have been expressed for
developing countries as well. As the effect of inflation on poverty draws popular interest,
the issue has drawn the interest of researchers as well. Considering the seriousness of
the issue, a number of studies have been carried out at different times, in different parts
of the world, to understand the impact of inflation on poverty.
Cardoso (1992), Powers (1995), Ravallion (1998), and Braumann (2004) find that
there is a positive correlation between inflation and poverty. Chaudhry and Chaudhry
(2008) found that food price inflation increases poverty in Pakistan. While there are
studies supporting the view that there is a positive relationship between inflation and
poverty, there are studies which negate this view as well. For instance, Blank and Blinder
(1985) found no such relationship between inflation and poverty. Cutler and Katz (1991),
in contrast, found that an increase in inflation reduces the poverty rate in the United
States. Romer and Romer (1998) found that, under certain conditions, there is a negative
relationship between inflation and poverty. The findings, so far, are fairly discrete in terms
of their spatial coverage, and mixed in terms of conclusion.
2
1.3. RESEARCH OBJECTIVES
Given the scale of poverty in the world (according to the World Bank's 2008
estimates, nearly 22.5% of the world's population still lives below the international poverty
line of $1.25 per day, see figure 1) and the importance of poverty alleviation, I believe the
impact of inflation on poverty and development deserves more attention. I, therefore,
intend to study the relationship between poverty and inflation on a global scale.
Specifically, the research questions I aim to address are:
1) How does the CPI inflation correlate with poverty?
2) Is the relationship between inflation and poverty similar in countries with

different income levels?
To answer these questions, I employ multivariate regression analysis panel data

analysis to be specific, accounting for country fixed effects, time fixed effects, random
effects, and dynamic panel data analysis with fixed and random effects. I also analyze
the effect of inflation on poverty in groups of countries differentiated by their level of
income. The results of my study show that, in general, there is a positive and statistically
significant relationship between inflation and poverty. I find that an increase in inflation is
associated with an increase in poverty, in most of the cases.
This brief introduction is followed by a detailed review of the existing literature in

Chapter 2. Chapter 3 describes all the data used in this study and record their respective
sources, Chapter 4 briefly describes the research methodology, and Chapter 5 formally
introduces the empirical models. I discuss the results in Chapter 6 which is followed by
conclusion in Chapter 7. Section 8 includes the references, followed by the appendices,
in section 9, where I enlist the entire dataset and a list of all the countries included in this
study.
3
CHAPTER 2
LITERATURE REVIEW
I have divided the literature review into a number of subsections. First, I discuss
the literature relevant to the concept and definition of poverty. After introducing the
concept of poverty, I discuss the debate about the status of poverty in the world among
various agencies. Then, I discuss the literature on the effect of inflation on poverty,
followed by a brief description of inflation inequality and how it affects our understanding
of the overall impact of inflation on poverty. I sum up the literature review with a summary
of the available literature on the present topic.
2.1. DEFINITION AND MEASUREMENT OF POVERTY
There has often been a debate regarding what constitutes poverty and, as a
result, there are many definitions of poverty. One of the most widely accepted definitions
of poverty comes from the United Nations (UN). According to the UN (1998),
Fundamentally, poverty is a denial of choices and opportunities, a violation of human

dignity. It means lack of basic capacity to participate effectively in society. It means not
having enough to feed and clothe a family, not having a school or clinic to go to, not
having the land on which to grow ones food or a job to earn ones living, not having
access to credit. It means insecurity, powerlessness and exclusion of individuals,
households and communities. It means susceptibility to violence, and it often implies
living on marginal or fragile environments, without access to clean water or sanitation
(UN Statement, June 1998 signed by the heads of all UN agencies)
This is a multidimensional definition of poverty which covers nearly all areas of

concern to poverty. The World Bank also offers another comprehensive definition of
poverty. According to the World Bank (2000),
"Poverty is pronounced deprivation in well-being, and comprises many dimensions. It

includes low incomes and the inability to acquire the basic goods and services necessary
for survival with dignity. Poverty also encompasses low levels of health and education,
poor access to clean water and sanitation, inadequate physical security, lack of voice, and
insufficient capacity and opportunity to better ones life."
As most of the definitions of poverty are quite broad, there are many approaches
to measure poverty. For the ease of measurement and comparison, I shall consider the
income poverty and adopt the absolute approach of measuring poverty. The absolute
approach sets a threshold level of income or consumption expenditure (Citro and
4
Michael, 1995). This threshold is widely known as the poverty line in development
literature. An individual or a family living with an income or consumption expenditure
below the set poverty line is designated as poor with reference to the poverty line
(Ravallion, 1992).
Different countries have different national poverty lines (Sachs, 2005). These
differences in the national poverty lines make it difficult to compare and analyze the
poverty statistics across countries. Hence, in order to be able to objectively calculate and
compare the poverty rates across countries, the World Bank has introduced the
international poverty line. In 2008, the World Bank came out with a revised figure of $1.25
per day adjusted for 2005 purchasing-power-parity (PPP) as the international poverty
line, which was previously set at $1.00 per day (Ravallion, Chen and Sangruala, 2009).
This means a person with a daily income or consumption less than $1.25 lives below the
international poverty line. The percentage of population living below the poverty line is
referred to as the poverty head count ratio or simply the head count ratio (UNDP, 2003).
This approach is very popular because of its objectivity and simplicity.
2.2. THE STATUS OF POVERTY IN THE WORLD
As it is difficult to find poverty data for a large panel from census dataset, I
use the World Bank estimates for poverty data. The poverty data is estimated by
POVCAL interactive software.1 The POVCAL is computer executable for calculating
poverty measures from grouped data. It is designed to be used as a reliable tool for
routine poverty assessment work. It uses sound and accurate methods for calculating
poverty and inequality measures with only a basic computer and any of the various types
of grouped distributional data typically available, often in published form. For further
details about the POVCAL software, see Ravallion and Huppy (1991), Ravaliion (1992),
Datt (1998), and Ravallion and Chen (2001). The World Bank, with the help of POVCAL
software, estimated that in 2008, there were almost 1.29 billion people living below the
international poverty line.
1
PovcalNet: An online poverty analysis tool, developed by the World Bank, updated version
released in February, 2012.
Link: http://iresearch.worldbank.org/PovcalNet/index.htm
5
60
50
40
30
20
10
0
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
% Population Below Poverty Line # of Poor (in Hundred Millions)
Figure 1 - Declining Poverty*

* Graph by the author, showing fall in poverty level across the globe
Data source: POVCAL data, the World Bank (2012).
Although, according to the figure above, the poverty has declined since 1981,
however, with 1.29 billion people or 22.5 % of the world's population living below poverty
the poverty line ($1.25 per day), as of 2008, the world poverty is a matter of grave
concern. Hence, the search for the determinants of poverty becomes important.
2.3. POVERTY AND INFLATION
Although there are many other factors that may cause poverty, inflation is
regarded as an influential factor in determining the poverty. The problem of poverty
intensifies even more when the prices of commodities in general, and food in particular,
increase. Several arguments have been made in support of the view that inflation
increases poverty (see Cardoso, 1992; Powers, 1995; Ravallion, 1998; Braumann, 2004;
Chaudhry and Chaudhry, 2008). Inflation has, accordingly, often been labeled as the
cruelest tax on the poor. However, empirical findings on the effect of inflation on
poverty, after controlling for the rate of economic growth, are, in fact, mixed. Blank and
Blinder (1985) with data from 1959 1983 period, studied the relationship between
6
macroeconomic variables such as growth, unemployment, business cycles, inflation and

poverty in the United States. They found, despite unending incantations about how
inflation weighs most heavily on the poor, that there was no evident correlation between
poverty and inflation. They confirmed that unemployment, not inflation, had the strongest
bearing on the well-being of the poor.
Cardoso (1992) studied the effect of inflation on poverty between 1970 and 1990
in the Latin American countries. She argued that Inflation increases poverty in two ways.
First, the inflation tax can reduce disposable real income. Second, if nominal wages
increase less than the price of goods consumed by wage earners, workers' real income
will decline. She found evidence that in Latin America, inflation affected the poor through
inflation tax but the effect was very small. Higher rates of inflation had resulted in higher
inflation taxes but unless the inflation was extremely high (above 100%) this increase in
inflation tax was less than 1%. However, she showed that the main effect of inflation on
poverty was manifested through real wages. She found that accelerating inflation reduces
real wages and increases poverty. According to her results, real wages fall by 14 percent
when inflation doubles.
Powers (1995) adopted a consumption based approach to measure poverty in the

United States. Analyzing data from 1959 through 1992, she found a robust and relatively
large positive relationship between inflation and the consumption poverty rate. Powers
argues that inflation affects the poor directly through a decline in their real wages owing
to the short-run rigidity of nominal wages.
Romer and Romer (1998) studied the impact of the United States monetary
policy on unemployment, poverty and inequality. They found that regression of the
change in poverty on the unanticipated change in inflation produced a small and
insignificant coefficient. However, the relationship between the change in poverty and the
anticipated change in inflation was significant. The point estimate implies that an
anticipated increase in inflation of one percentage point is associated with a decline in
poverty of 0.2 percentage points. According to Romer, unanticipated inflation reduces the
real value of nominal assets and liabilities. It therefore causes real capital losses for
nominal creditors and real capital gains for nominal debtors. If the poor are net nominal
debtors, these effects benefit them. However, owing to the fact that the poor households
7
usually hold liabilities of small size, these benefits from unanticipated inflation are
insignificant.
Another finding of theirs, in this context, is very interesting. They find that an
expansionary monetary policy aimed at rapid economic growth is associated with
improved conditions for the poor in the short run, but prudent monetary policy aimed at
low inflation and steady output growth is associated with enhanced well-being of the poor
in the long run. Romer contends that inflation can harm the poor by reducing the real
value of wages and transfers. Another argument is that since inflation reduces the value
of the cash-holdings, it hurts the poor by making them poorer.
Erosa and Ventura (2002) observe that poor households hold more cash relative
to other nancial assets than rich households do. The poor then pays a disproportionate
share of the ination tax and are hurt more by ination.
According to Braumann (2004), the fall in real wages during inflation can also be
linked to increasing poverty in Latin America during the last two decades. From an
examination of the data for the period 1960 - 1997, he shows that poverty maxima
coincided with inflation maxima. The living standards of the poor were most hurt by
inflationary macro policies that intended to favor them. He, therefore, concludes that
fighting inflation might thus be an important step towards reducing poverty.
In the Indian context, Ravallion (1998) studied the impact of higher food prices
with survey data spanning 1959-1994. He found that there was strong positive correlation
between higher prices and poverty. Later, Datt and Ravallion (2002), using panel data on
poverty from Indian states, showed that inflation adversely affected Indias poor and
attributed this effect primarily to adverse shocks on the real wage of unskilled labor.
2.4. EFFECT OF INFLATION ON POVERTY: POSITIVE OR NEGATIVE
Although previous arguments and evidence tends to support the view that inflation
affects poverty positively, there are counter arguments to this. The UN Report on the
World Social Situation 2010, Rethinking Poverty, raises a number of interesting
questions: If inflation reduces real wages, then employment should rise, creating more
income-earning opportunities for workers. Therefore, the employment effect of inflation
(creating more jobs because of lower labor costs) can outweigh the real-wage effect
(lower income) on poverty. This is likely to be the case, as the inflation (real wage)
8
elasticity of poverty is found to be significantly less than the output (employment)

elasticity of poverty (UN Report, 2010). Furthermore, most of the poor are net debtors
and inflation reduces the real value of their debt. So this way inflation may have a
negative correlation with poverty. Thus, the effect of inflation on poverty is not
straightforward. Poverty may be positively correlated with inflation or the reverse can also
be the case.
2.5. INFLATION INEQUALITY
Besides the direct effect of inflation on poverty, another issue that seems to have
a substantial impact on poverty is the inflation differentials across sectors. Inflation is not
the same in all the sectors and hence its impact on different section of population will also
be different. Given the heterogeneity of consumption pattern among various segment of
population, the effect of inflation will also be different in each section.
For example, those involved in transportation business will be more affected by

an increase in the oil price whereas a farmer will be more affected by the increase in the
prices of seeds and fertilizers. The most popular indicator of price level, the CPI, gives
more weightage to the consumption pattern of urban households. The CPI basket
contains many items that may not reflect the consumption pattern of rural households.
Further, the consumption set of the poor is most likely to be confined within food,
fuel, medicine, and some essential commodities. Therefore, inflation, for the poor, is the
increase in prices of those essential commodities. So the inflation computed from the CPI
- based on a representative urban household's consumption, is likely to be biased
Berkley (2003). Grimm and Gunther (2005) with evidence from Burkina Faso find that
ignoring inflation inequality in growth measurements can severely bias assessments of
inflation and growth.
Son and Kakawani (2006), in the context of Brazil between 1999 and 2006, found
that if food prices increased by 1%, the poverty head count ratio would increase by
0.42%. If non-food prices increased by 1%, the head count ratio increased by 1.02%.
Thus, they found that if the overall prices increased by 1%, the poverty head count ratio
increased by 1.44%.
In the case of Indonesia, Sugema, et al. (2010) have found evidence that inflation
has a larger impact on poor households both in rural and urban area relative to non-poor
9
household. They also found that rural poor households are more vulnerable to economic
shocks, especially inflation. Furthermore, they find that price fluctuation on foods and its
products has a larger impact on poverty relative to non-food commodity.
A study by the Asian Development Bank (2011) noted that global food prices
increased by more than 30% in the first 2 months of 2011, and domestic food inflation
averaged about 10% for a number of regional economies. The study further found that a
10% rise in domestic food prices in developing Asia risks creating an additional 64.4
million poor people, or increasing the percentage of poor by 1.9 points. So a 30%
increase in global food prices would increase the percentage of poor by 5.7%.
Chani, et al. (2011) have analyzed the impact of macroeconomic parameters on

growth and poverty in the context of Pakistan. Covering time series data from 1972
through 2008, they find that inflation is positively correlated with poverty. Quantifying the
effect of inflation on poverty, they found evidence that one percentage point increase in
the CPI is expected to raise the head count ratio of poverty by 0.38% next year.
2.6. SUMMARY OF THE LITERATURE REVIEW
The literature reviewed so far can be summarized as follows. First, inflation is

positively correlated with poverty in many cases, but in some cases either there is no
clear relationship between inflation and poverty or the relationship, if at all exists, is
statistically not significant. Besides, there are some arguments which even contend that
the relationship between inflation and poverty could be negative, as well. Second,
inflation erodes the value of cash holdings, reduces real income and hence lowers
peoples purchasing power. Third, inflation inequality is a significant issue that needs
more attention as food price inflation affects the poor more adversely than inflation in
general. Although the existing literature allows us to know about the relationship between
inflation and poverty, most of the studies pertain to a country or a very specific group of
countries in a particular region such as Latin America, or Sub-Saharan Africa. So the
general question about the relationship between inflation and poverty is yet to be
answered. Hence there is scope for a study on the relationship between poverty and
inflation with a large cross-section of countries.
10
CHAPTER 3
RESEARCH METHODOLOGY
In order to develop a general understanding of how inflation affects poverty, I form
a panel of 115 developing countries spanning the time period from 1981 through 2008.
However, within these developing countries, there are vast differences among them in
terms of their levels of income, inflation, consumption, and poverty (for a brief discussion
on the differences across countries, see Chapter 4 on Data). Given such differences
across countries, not much can be inferred from an attempt to study the effect of inflation
on poverty on a global scale. And studying just one country at a time contributes to the
country specific results but may not contribute much to the general understanding of the
effect. Keeping these points in mind, I first analyze the relationship between poverty and
inflation for all the countries and then group the countries into three separate groups: Low
Income Countries, Lower Middle Income Countries, and Upper Middle Income Countries.
For classifying the countries according to their income, I follow the World Banks
classification. In this method, economies are divided according to 2009 GNI per capita,
calculated using the World Bank Atlas method.1 The groups are: low income, $995 or
less; lower middle income, $996 - $3,945; upper middle income, $3,946 - $12,195;
and high income, $12,196 or more. A full list of all the countries according to their level of
income is included in the appendix.
For the regression models, I consider absolute poverty level as my dependent

variable and consumer price index (CPI) inflation as my main independent variable.
Further, poverty is argued to be dependent on many other factors, as well. For example,
studies such as Barro and Martin (1995), Todaro (1997), and Norton (2002) find that
poverty is negatively correlated with economic growth. Hence, I include real GDP per
capita as an independent variable and expect to find a negative relationship between
poverty and GDP per capita. Besides inflation and GDP per capita, poverty may also be
affected by external debt. External debt is a loan taken by a country either another
country or an international agency such as the World Bank, or the International Monetary
Fund.
1
The Atlas method is a method used by the World Bank to estimate the size of economies in terms of gross
national income (GNI) in U.S. dollars.
11
The debtor country has to pay interest on the loan amount to the creditor country
or agency. The interest payment made to the creditor agency reduces the funds available
to the debtor country which the latter could otherwise utilize for its development. As a
result, the amount of external debt may affect the wellbeing of the citizens of the country.
However, the relationship between poverty and external debt may not be
straightforward (Shreideh, 2008). Maier (2005) found evidence supporting the view that
higher external debts are associated with negative effects on the levels of income of the
poorest 40% of the population. However, he cautioned that the empirical findings of the
impact of the external debt on poverty should be interpreted carefully as sensitivity
analysis showed inconsistent results. So, I include external debt as a control variable and
expect to find a statistically significant relationship between external debt and poverty
although at this point, I am unable to ascertain the directionality of the relationship.
I consider educational attainment as another control variable as educational

attainment has been found to be negatively correlated with poverty in many studies (see
Bernstein, 2007 and Ladd, 2011) mostly because of its effect on the possibilities of
getting an employment offer as well as the amount of wage offered. Higher education
leads to higher employment possibilities and higher wages. The negative correlation
between poverty and education may be due to two reasons. For instance, high poverty
may result in low educational attainment or it may be the other way round. Lack of
education might restrict an individuals ability to earn. Hence, low educational attainment
may result in high poverty and vice versa. In the present case, I assume that low
educational attainment restricts ones earning power which results in a higher level of
poverty. Thus, I expect educational attainment to be negatively correlated with poverty.
Another factor that affects poverty is the state of governance. There are
arguments which support the view that democracy, as opposed to autocracy, helps in
reducing poverty and hence democracy should have a negative correlation with poverty.
Kamal (2000) argues that genuine democracy offers a unifying force, participatory
institutions, and a process that can bring different groups within a nation together to deal
with poverty. Thus, a negative relationship between democracy and poverty may be
expected.
However, there are counter arguments to this thesis, as well. For example,
Varshney (1999) shows that in some cases pure autocracies have succeeded in
12
eliminating poverty while democracies have not. So there may be some cases where
democracy can have positive correlation with poverty. I include the polity score
(difference between democracy score and autocracy score) as a proxy for the quality of
governance.
For the empirical analysis, I consider absolute poverty measured by poverty

head count ratio or the percentage of population living below the international poverty line
(denoted by POPBPL), as the dependent variable and log of CPI (denoted by LNCPI),
the consumer price index, as the main independent variable. In addition, I also control for
other factors such as GDP per capita (LNGDPPC) as a proxy for income, interest
payment on external debt (INTPMT) expressed as percentage of GDP as a proxy for
external debt, secondary school enrolment ratio (SECSCHENR) as a proxy for
educational attainment, and polity score (POLITY) as proxy for political/democratic
stability. In the dynamic model, I also include one period lag of poverty (LAGPOPBPL) as
an independent variable.
13
CHAPTER 4
DATA
Since poverty head count ratio is the dependent variable in this study, I have tried
my best to collect the absolute poverty data for the widest cross-section of countries
spanning the longest period of time. The World Banks POVCAL (February, 2012)
estimates poverty data for 139 countries for the period 1981 through 2008. POVCAL is
an online, interactive, computational poverty analysis tool. The estimation frequency is
three years. So the database has a total of 10 observations (including years 1981, 1984,
1987, 1990, 1993, 1996, 1999, 2002, 2005, and 2008) for most of the countries.
The size of the dataset is restricted by that of the poverty data. Ideally, therefore, I
should have 1390 (=139 x 10) observations. However, owing to the fact that some
countries have data for only one or two years, I exclude those countries from my study
and included only 115 countries in my panel. Thus, the actual number of observations
stands 1150 which is less than 1390 (See Table 1). Since some of the countries have
data for only a few of the variables, the panel remains unbalanced.
Table 1. Summary Statistics of the dataset
Workfile structure: Panel Annual

Indices: COUNTRY x DATE
Panel dimension: 115 x 10
Range: 1981- 2008 x 115 -- 1150 observations
Total Data Points = 37550
The World Bank (POVCAL) further classifies the countries into four income
groups: Low Income Countries, Lower Middle Income Countries, Upper Middle Income
Countries, and High Income Countries depending on their levels of income. The low
income group consists of 45 countries, the lower middle income group consists of 46
countries, and the upper middle income group has 24 countries in it. The high income
group contains just one country. As the high income group includes only one country
Slovenia, I exclude this lone-country group from my study.
Table 2 shows the number of countries I include in my study from each group
(income level) along with their mean level of income. In the Low Income group, there are
14
45 countries with an average per capita annual income of $1684. There are 46 countries
in the Lower Middle Income range. These countries have an average annual per capita
income of $4218. The 24 countries in the Upper Middle Income group have an average
annual income of $8425 per person. The average income for all the countries in the
dataset is about $4000 which is close to the average annual per capita income of the
Lower Middle Income group. (At the end, in the appendices, I enlist the entire dataset
with all the variables for all the countries and also the list of countries according to their
respective income categories).
Table 2. Countries according to their Level of Income
Mean GDP per capita

World Bank Level of Income Number of Countries
($), adjusted for PPP
1 Low Income Countries 45 1684.272

2 Lower Middle Income Countries 46 4218.574
3 Upper Middle Income Countries 24 8425.301
4 All Income Levels 115 4065.158
4.1. POVERTY DATA
I collect the poverty data from the World Bank's poverty estimates released in
February 2012. The poverty estimates have been made using POVCAL - an online
poverty analysis tool. POVCAL is an interactive computational tool that allows one to
replicate the estimates made by the World Bank's researchers in assessing the extent of
absolute as well as relative poverty in the world. For my study, I use the poverty head
count ratio (percentage of population living below the international poverty line) as the
measure of absolute poverty. In February 2012, the World Bank released a major update
of the developing world's poverty estimates for 1981-2008. For exact methodology of this
estimation see Ravallion and Chen (2002), Ravallion and Chen (2004), Ravallion and
Lokshin (2006), Ravallion and Chen (2008), Chen, Ravallion, and Sangruala (2009).
The new poverty estimates combine the purchasing power parity (PPP) adjusted
exchange rates for household consumption data from more than 850 household surveys
across the developing countries. Over 1.2 million randomly sampled households were
interviewed for the 2008 estimate, representing 90 percent of the population of the
15
developing world. Covering 139 developing countries and a span of 27 years (with 10
observations for each countries at 3 year intervals), this is one of the largest dataset
available for measuring the absolute poverty at present. From this pool, I form a panel
comprising of 115 developing countries from around the world and 10 periods.
By looking at the poverty data, we can see that for most of the countries, the
absolute poverty has fallen over the period between 1981 and 2008 (see Figure 1, which
shows the fall in aggregate poverty level). However, there is a high degree of
heterogeneity among countries with respect to their poverty status. Table 3 shows the
descriptive statistics of the dependent and independent variables.
Table 3. Descriptive Statistics of the dependent and independent variables.
%Change
POPBPL in CPI CPI GDPPC INTPMT SECSCHENR POLITY
Mean 30.99668 85.26739 1.79E+09 3671.737 2.127057 49.30444 1.004967

Median 22.60500 8.800000 82.85750 2259.676 1.531781 47.50267 2.000000
Maximum 94.07000 10896.20 3.72E+11 36244.53 22.96408 110.0316 10.00000
Minimum 0.000000 -34.57100 0.007000 172.5 0.024114 2.569130 -10.00000
Std. Dev. 27.07798 641.2873 2.00E+10 4055.350 2.120229 28.74818 6.587463
Skewness 0.513429 13.02221 13.84906 2.844604 3.181515 0.089154 -0.139608
Kurtosis 1.917011 190.5670 222.1823 16.33172 22.63119 1.696722 1.384275
Jarque-Bera 56.05375 1417951. 1228336. 5287.564 10717.77 43.54654 67.66129
Probability 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
Sum 18722.00 80918.75 1.08E+12 2217729. 1284.742 29779.88 607.0000
Sum Sq. Dev. 442129.9 3.90E+08 2.41E+23 9.92E+09 2710.708 498354.0 26166.99
Observations 604 949 604 604 604 604 604
The column POPBPL represents the dependent variable - percentage of

population living below the poverty line or the poverty head count ratio. The highest level
of poverty was estimated to be 94% for Malawi in the year 1990. This means that in 1990
94% of Malawi's population lived below the international poverty line of $1.25 per day.
The lowest level of poverty is 0% which has been observed in many cases. The lowest
poverty range of 0 2 % has been estimated in as many as 250 instances, while the
highest poverty rate of 94% has been observed only once.
16
4.2. CONSUMER PRICE INDEX (CPI) DATA
The end of the year CPI data for all countries (for which I have poverty data from
the POVCAL dataset) was available from the International Monetary Funds (IMF) World
Economic Outlook (WEO) report dataset. I adjust the base year to 2005 wherever it is
required. As the value of CPI widely varies across countries, it will be interesting to see
the percentage change in CPI, i.e. the inflation figures for countries. For empirical
analysis, I use log of CPI and not CPI as such. In the data pool, Armenia has
experienced the highest percentage change in inflation in the year 1993 which is a
catastrophic annual CPI-inflation of 10896%. The lowest inflation figure is recorded for
Vietnam which is -34%.
4.3. GROSS DOMESTIC PRODUCT (GDP) PER CAPITA DATA
I use the purchasing power parity (PPP) adjusted real GDP per capita from the
same World Economic Outlook (WEO) dataset. The countries under consideration vary a
great deal in terms of their income (GDP per capita figures). Among the countries
included in my study, the Gambia had the highest per capita income of $36,244 in 2008
while Mozambique with GDP per capita of $172.5 in 1984 had the lowest income.
Although every country has experienced an increase in the GDP per capita, this increase
is not uniform.
4.4. EXTERNAL DEBT DATA
As a proxy for external debt, I use the data on interest payment made to foreign
countries as percentage of the national GDP. For most of the countries the data was
available from the World Banks Global Development Finance (GDF) dataset. From the
interest payments made, it is apparent that Guyana had the highest external debt relative
to its GDP as its interest payment was roughly 22% of its GDP.
4.5. SECONDARY SCHOOL ENROLLMENT RATIO
This measures the number of pupils enrolled in secondary schools, regardless of

age, expressed as a percentage of the population in the theoretical age group for the
same level of education. The United Nations Educational, Scientific and Cultural
Organization (UNESCO), describes 'Gross Enrollment Ratio' as the total enrollment
within a country "in a specific level of education, regardless of age, expressed as a
17
percentage of the population in the official age group corresponding to this level of
education. It provides information on the share of population with a level of skills deemed
to be necessary for significant developmental progress.
The Gross Secondary School Enrollment Ratio considers children usually

between the ages of 12 17 years. I have collected the data on secondary school
enrolment ratio from the World Development Indicators compiled by the World Bank. The
secondary school enrollment ranges from 2.57% to 110%. The reason that the maximum
enrollment exceeds 100% is because of the fact that the number of students enrolled in
secondary schools in a country can be more than the number of children in the specified
age group in that particular country.
4.6. POLITY SCORE
I use the polity score as a proxy for democracy and political stability. It examines
concomitant qualities of democratic and autocratic authority in governing institutions,
rather than discreet and mutually exclusive forms of governance (Marshall, 2010). This
perspective envisions a spectrum of governing authority that spans from fully
institutionalized autocracies through mixed, or incoherent, authority regimes (termed
"anocracies") to fully institutionalized democracies. The polity score is defined as the
difference between the democracy score and the autocracy score of a country for a given
year. The polity score gives a measure of how democratic a country is against the other
extreme, that is, autocracy. The score is polity 2 series from the Polity IV project of the
Center for Systemic Peace, VA, USA. The polity score captures the regime authority
spectrum on a 21-point scale ranging from -10 (hereditary monarchy) to +10
(consolidated democracy) including zero (Marshall and Jaggars, 2010). The higher the
polity score, the more democratic a country is. If a country has a polity score of -10, it is
completely autocratic.
18
CHAPTER 5
EMPIRICAL MODELS
With the dependent and independent variables discussed in the previous section,
I construct and empirically estimate the coefficients of each of the independent variable
from the respective regressions.
POPBPLi,t = C + i,t LNCPI + i,t LNGDPPC + i,t INTPMT + i,t SECSCHENR + i,t
POLITY + i,t ...(1)
where, C = constant term,
POPBPL = percentage of population living below the $1.25 poverty line,
LNCPI = natural log of end of the year consumer price index (CPI),
LNGDPPC = natural log of gross domestic product (GDP) per capita,
INTPMT = interest payment on external debt expressed as a percentage
of GDP,
SECSCHENR = secondary school enrollment ration expressed as percentage
of population,
POLITY = relative measure of polity expressed as the difference between
the democracy score and the autocracy score of a country.
= error term, and , , , , and are coefficients to be estimated.
The fixed effect version of this model is specified as follows:

POPBPLi,t = t + i + i,t LNCPI + i,t LNGDPPC + i,t INTPMT + i,t SECSCHENR + i,t
POLITY + i,t . (2)
where is expected to capture the period fixed effect and would capture the
cross-section or country fixed effect. Then I introduce the dynamic panel model in which
the lagged dependent variable is incorporated as a regressor. The basic idea behind the
dynamic model is to see how the value of the dependent variable in the previous period
affects its value in the present period. This gives another advantage of removing the any
possible autocorrelation from the dependent variable.
19
POPBPLi,t = C + i,t LNCPI + i,t POPBPLi,t-1 + i,t LNGDPPC + i,t INTPMT + i,t
SECSCHENR + i,t POLITY + i,t (3)
where POPBPLi,t-1 denotes the one period lag of the dependent variable POPBPL.
It should be noted here that one period lag does not mean one year lag. Since the
frequency of the periods is 3 years, one period lag here means the value of the variable
three years ago. Once I set up the dynamic panel data model, I estimate the fixed effects
models for the dynamic case also.
20
CHAPTER 6
RESULTS
6.1. PANEL LEAST SQUARED MODEL
The static multivariate regression analysis results are tabulated below in tables 4,
5, 6, and 7. Table 4 enlists the regression results of the panel least squared model
described as Model 1 in section 4. Table 5 enlists the results from the country fixed
effects model, Table 6 records the results from the period fixed effects model, and Table
7 records the country and time fixed effects model. The Table 4 contains results from four
different regressions. The first regression (regression number 1, as indicated by the
column 1) in the respective tables analyzes data from all countries, the second
(regression number 2) analyzes data from low income countries, the third (regression
number 3) refers to lower middle income countries and the fourth regression (regression
number 4) draws data from the upper middle income countries. The first row gives the
column titles; the other columns in the table are self-explanatory.
6.1.1. All Countries
The regression 1 (indicated in the first column of table 4) analyzes data from all of
the 115 countries together (as noted in the second column). It takes the poverty head
count ratio or the percentage of population living below the $1.25 per day poverty line
(POPBPL) as the dependent variable and natural logarithm of end of the year CPI
(LNCPI), natural logarithm of GDP per Capita (LNGDPPC), interest payment made on
external debt expressed as percentage of GDP (INTPMT), secondary school
enrollment ratio (SECSCHENR), and polity score (POLITY) in the fourth column as
regressors. The third column notes the model type; PLS indicates that the model is Panel
Least Squared model.
In the panel least squared regression (regression 1), the coefficient of LNCPI is
close to 0.67. This implies that, ceteris paribus, one percentage point increase in CPI is
associated with 0.67% increase in the POPBPL. i.e., an increase in the CPI by 1% can
result in an increase in the percentage of population living below the poverty line by
0.67%. The sign of this coefficient is as expected and the t-statistic is 4.65 (column G),
which is greater than t critical = 2.576 with 604 observations. The probability (prob = 0)
figure of zero means that there is 0% chance that this relationship has been recorded
21
purely by chance. The positive relationship between inflation and poverty is as expected.
This result is in agreement with the findings of Cardoso (1992), Powers (1995), Ravallion
(1998), Braumann (2004), and Chaudhary and Chaudhary (2008) that there is a positive
correlation between price level and poverty.
Researchers have given different explanation supporting the view that inflation
increases poverty. First, inflation hurts poor by making them poorer caused by erosion of
the value their cash-holdings. For instance, Erosa and Ventura (2002) find evidence that
poor households hold more cash relative to other financial assets than richer households.
Since inflation directly erodes the value of the cash holdings, the poor is hurt more than
non-poor. As a result, the poor becomes poorer with successive phases of inflation.
Another view is that inflation affects the poor directly through a decline in their real
wages owing to the short-run rigidity of nominal wages (Powers, 1995). Both these
explanation account for the sort run effects of inflation on poverty. Cardoso (1992) made
an even stronger assertion. She at first argued, and then provided evidence, that inflation
increases poverty by decreasing long term real wages.
Among the control variables, GDP per capita has the strongest correlation with
poverty. The coefficient on LNGDPPC = -11.60 indicates that one percentage point
increase in GDP per capita is associated with a decrease in the poverty head count ratio
by 11.6%. This is statistically significant and the magnitude of the t-statistic (= - 0.19771)
is again much larger than the critical value. Thus, I find evidence that economic growth
reduces poverty. This result is also according to my expectation. My finding conforms
with the findings of Barro and martin (1995), Todaro (1997), Norton (2002) that economic
growth reduces poverty.
The interest payment shows a negative relationship with poverty. An increase in

the interest payment (INTPMT) on external debt as a fraction of GDP apparently
decreases the poverty head count ratio by 0.88%. The sign of the coefficient on INTPMT
is contrary to my expectation as I was expecting to see positive relationship between
external debt and poverty. However, such a relationship is not totally unexpected as there
are arguments supporting both positive and negative relationship between external debt
and poverty exist. Shreideh (2008) observes that the Links between external debt poverty
are complex, reflecting, among other things, the multidimensional aspects of poverty.
22
Maier (2005) found evidence supporting the view that higher external debt levels are
associated with negative effects on the level of the income of the poorest 40 percent.
However, he cautioned that empirical findings of the impact of the debt indicators on pro-
poor growth should be interpreted carefully due to inconsistent results of the sensitivity
analyses.
Although it is generally argued that higher external debt leads to higher levels of
poverty, but empirical findings suggest that the relationship is not straightforward. In fact,
there can be an argument in favor of the negative impact of external debt on poverty. For
instance, if the countries take loan from international agencies and other countries to fund
their poverty alleviation program and as a result if the poverty level goes down, then we
can find a negative relationship between external debt and poverty. But this is not
necessarily the only interpretation of this relationship. Although in the present case, I find
the evidence of a negative relationship between external debt and poverty but, later, in
the sensitivity analyses, the relationship becomes positive in some cases and becomes
statistically insignificant in some other cases. I shall discuss about the positive
relationship between external debt and poverty when such an occasion arises.
The educational attainment, as expected, has a negative correlation with poverty

with a coefficient of -0.43 on SECSCHENR. That is, one percent increase in the
secondary school enrollment is associated with 0.43% decrease in the poverty head
count ratio. That means, higher educational attainment reduces poverty and lower
educational attainment would increase poverty. The negative coefficient on POLITY (-
0.155) means a higher level of democracy in a country reduces poverty in that country. If
the democracy score increases by 1% relative to the countries autocracy score, the
poverty level falls by 15.5%. All the coefficients are statistically significant at 1% level.
The value of R-squared = 0.69 indicates that 69% of the variation in the dependent
variable can be explained by the regressors on column (D).
While it is generally accepted that educational attainment is negatively related to

poverty, the role of democracy in poverty alleviation is not clear. Varshney (1999) argues
that while it is true that no long-lasting democracy in the Third World has allowed the
conditions of its poor masses to deteriorate consistently or dramatically, none so far has
successfully eliminated poverty.
23
Varshney (1999) shows that democracies have been slow and steady, but not
spectacular, in attacking poverty. In comparison, countries with long authoritarian rule
show no such pattern. Another study, Kamal (2000), puts forward the argument that
genuine democracy offers a unifying force, participatory institutions and a process that
can bring groups within nations (and also different nations) together to deal with poverty.
Thus, a small negative relationship between poverty and democracy may be expected. In
this case, I find a negative relationship between poverty and democracy which is
expected.
However, an antithesis of this observation is also not unheard of. Varshney (1999)
has shown that in some cases pure autocracies have succeeded in eliminating poverty
while democracies have not. So there may be some cases where a positive relationship
between democracy and poverty can exist. Later in subsequent analyses, I find the
evidence of positive relationship between democracy and poverty. I discuss the possible
reasons and findings of previous studies as the case arises.
6.1.2. Low Income Countries
The second regression on Table 4 details the results from analysis of the
relationship between the dependent variable and the independent variables in low
income countries. The results, in this case, are slightly different than those in the case of
all the countries combined. In the low income countries, the relationship between inflation
and poverty is positive. The coefficient on LNCPI is 0.17 which is small compared to the
coefficient in regression 1. The standard error is greater than the coefficient itself which
casts doubt on the relevance of the coefficient. The t-statistic is also small and the
probability that this relationship might have been observed by chance is quite high with a
P-value of 0.82. Although this coefficient is not statistically significant, the sign of the
coefficient is positive which is as expected. Even the R-squared (=0.44) is also low as
compared to the previous regression. This means that in low income countries, inflation
has a small positive relationship but the relationship is not significant. This apart, the
coefficients on LNGDPPC, INTPMT, and SECSCHENR have negative signs. That is, an
increase in GDP per capita reduces poverty and so does the interest payment and
secondary school enrollment. The sign of the coefficient on INTPMT is not as expected.
However, the coefficient on INTPMT is not statistically significant at 5% or even 10%
level.
24
Table 4. Results from the Panel Least Squared Model (PLS)

Dependent Variable: Population Head Count Ratio (% of Population Living Below the Poverty Line)
Number
Regression Income Model Independent Standard Durbin- of observ
Number Level Type Variable Coefficients Error t-statistic Probability R-Squared Watson ations
1 All Countries P LS* LNCPI 0.671535 0.14437 4.65136 0 0.6858 0.21 604
LNGDPPC -11.60097 0.58677 -19.771 0
INTPMT -0.880023 0.27535 -3.1961 0
SECSCHENR -0.434453 0.02738 -15.867 0
POLITY -0.155239 0.05643 -2.7512 0.01
2 Low Income Panel LS LNCPI 0.174838 0.766811 0.228006 0.82 0.440287 0.298 251
LNGDPPC -7.173599 1.539851 -4.65863 0
INTPMT -0.517381 0.752792 -0.68728 0.493
SECSCHENR -0.473793 0.045819 -10.3406 0
POLITY 0.259776 0.124889 2.080059 0.039
Lower Middle
3 Income Panel LS LNCPI 0.59471 0.133709 4.447799 0 0.37997 0.165 254
LNGDPPC -9.99929 1.786033 -5.5986 0
INTPMT -0.004529 0.463271 -0.00978 0.992
SECSCHENR -0.251769 0.040807 -6.16983 0
POLITY -0.112208 0.049918 -2.24783 0.026
Upper Middle
4 Income Panel LS LNCPI 0.940321 0.176631 5.323646 0 0.359273 0.368 102
LNGDPPC -5.301079 1.358571 -3.90195 2E-04
INTPMT -1.056483 0.434784 -2.4299 0.017
SECSCHENR -0.252545 0.040632 -6.21535 0
POLITY 0.198451 0.126315 1.571074 0.12
* PLS: Panel Least Squared Model

Note: Estimates are Consistent with White's Heterogeneity Test.
25
The coefficient on POLITY in this case is positive. That means a countrys shift
from a relatively authoritarian regime to a relatively more democratic form of governance
increases poverty. This observation seems to contradict the previous observations.
However, the relationship between democracy and poverty may not always be
straightforward. For example, Bardhan (2001) notes that the empirical literature on
democracy and development is rather unhelpful and unpersuasive. He mentions in his
article Democracy and Development: A Complex Relationship that, the three surveys of
the empirical literature that he has seen come out with three different conclusions: One
by Sirowy and Inkeles (1991) is supportive of a negative relationship between democracy
and development; one by Campos (1994) is of a generally positive relationship; and the
one by Przeworski and Limongi (1993) is agnostic. I have already discussed the possible
explanations in favor of a negative relationship between poverty and democracy in the
previous section. In this article, Bardhan attributes the reason for a positive relationship
between democracy and poverty to the inefficiency of some of the democracies in the
developing countries.
Such a positive relationship between democracy and poverty may not be true for
all other countries but may be true for the low income countries. The reason is perhaps a
number of authoritarian regimes in some poor countries have been toppled and
democracies have been established or just a relative shift of regime characteristics has
taken place. However, this change has not resulted in reduced levels of poverty in those
countries. Hence, we see the positive relationship between polity score and the level of
poverty.
Overall, out of five independent variables, four have signs on the coefficients
similar to the previous regression. So the coefficients of the independent variables, in low
income countries, do not necessarily confirm or wholly contradict the findings in the case
of all the developing countries combined. Since the R-squared is low (= 0.44), the
independent variables can only explain 44% of the variation in the dependent variable.
6.1.3. Lower Middle Income Countries
From regression 3 we can see the relationship between the poverty head count
ratio and the independent variables in the lower middle income countries. Log of CPI has
a positive relationship with the poverty head count ratio. This implies that in lower middle
income countries also, an increase in the price level increases the percentage of
26
population below the poverty line. The coefficient on LNCPI is statistically significant at
1% level. The coefficients on other control variables, except INTPMT, have the expected
negative signs and are statistically significant as well. However, the estimated coefficient
on INTPMT is not statistically significant and the coefficient on POLITY is statistically
significant at 3% level. The low value of R-squared (= 0.38) shows that only about 38% of
the variations in the dependent variable can be explained by the independent variables.
Overall, the results are similar to those in the previous cases.
6.1.4. Upper Middle Income Countries
Regression 4 on Table 4 shows the relationship between the poverty head count
ratio and the independent variables for the upper middle income countries. The
coefficients, except those on INTPMT and POLITY, have expected signs. The
relationship between CPI and the poverty level is a strong, positive, and statistically
significant at 1% level. Although the coefficient on the polity score is positive, which is
unexpected, but it is not statistically significant at even 10% level. I have explained before
the possible reasons that may lead to negative relationship between external debt and
poverty, which we observe in this case. The low value of R-squared tells us that the
model explains only about 36% of the variation in the dependent variable.
To sum up the first set of results, I can say that while CPI shows a positive
relationship with poverty level in all cases, GDP per capita and educational attainment
show negative relationship with poverty. The other two control variables, INTPMT and
POLITY are not consistent in their signs or in the levels of statistical significance.
However, out of the four regressions, only in the first case, a high R-squared (= 0.6858 )
was observed. In all other cases, the regressions had low explaining power as indicated
by their respective R-squared values.
One of the reasons for low R-squared could be the inter-country heterogeneity, as
I have included countries from all over the world with different socioeconomic
characteristics in my study. The same can happen because of period specific factors, as
well. As a result, some information might have been left uncaptured by the model. So I
consider to run the regressions with Country Fixed Effects, Period Fixed Effects, and both
Country plus Period Fixed Effects. Before I go on to run regressions with country and
period fixed effects purely on the basis of intuition, I perform a formal F-ratio test to see
whether fixed effects model is a better fit than a pooled cross-section model. This tests
27
the null hypothesis that there are no differences across countries or periods against the
alternative hypothesis that there are differences across countries or periods or both.
Under the null hypothesis, all the constant terms are equal whereas the alternate
hypothesis is that the constants are different across countries or periods. Next, I
construct an F-ratio test for testing the significance of fixed effects.
6.2. TESTING THE SIGNIFICANCE OF THE FIXED EFFECTS
For the F-ratio test, I use the first regression (regression #1) without fixed effects
from Table 4 for all countries and regression # 13 from Table 7 with both country and
period fixed effects. I use the F-ratio as defined in Econometric Analysis by Greene,
William H., 6th Edition, page 197.
The F ratio is defined as
(RFE2 RPooled2)/(n 1)
F(n 1, nT n K) =
(1 RFE2)/(nT n K)
the number of periods covered, RFE2 is the R-squared from the model with fixed effects
and RPooled2 is the R-squared from the model without fixed effects.
Here, I have n = 115, K = 5, T = 10, RFE2 = 0.9399 and RPooled2 = 0.6858.
Therefore, F(114, 1030) = {(0.9399 0.6858)*1030}/{114*(1 0.9399)} = 38.199.

This F-ratio is much greater than the critical value for F-ratio with 114 and 1030 degrees
of freedom, which is equal to 1. Hence, the null hypothesis that there is no country or
period specific effects is rejected. So I conclude that the fixed effects model is a better fit
as compared to the model without fixed effects.
I run three different types of fixed effects models. First, country fixed effects
model, then period fixed effects model, and then country and period fixed effects model.
Table 5 records results from the regressions with country fixed effects, Table 6 details the
results from period fixed effects, and Table 7 records results from the country and period
fixed effects together. Each table has four regressions for countries with different income
levels as discussed in the case of Table 4. The structure of the Tables 5, 6, and 7 is the
same as that of Table 4. For the interpretation of each column, see the description of
Table 4.
28
6.3. PANEL LEAST SQUARED MODEL WITH COUNTRY FIXED EFFECTS (CFE)
In this section, I shall discuss the results from country fixed effects model. At first,
I shall talk about the case with all the countries, then I shall discuss the results in the
context of Low Income countries to be followed by the results from Lower Middle Income
countries. Finally, I shall detail the results for the Upper Middle Income countries.
6.3.1. CFE - All Countries
The regression 5 on Table 5 records the estimation of the country fixed effects
model for all countries. The coefficient on LNCPI is strong, positive, and statistically
significant at 1% level. The coefficient is stronger than it was without the country fixed
effects. Apart from this, all other coefficients have negative signs. This is consistent with
the model with no fixed effects. However, except for the coefficient on LNGDPPC, which
is significant at 1% level, the other coefficients lose their levels of statistical significance.
While the coefficient on SECSCHENR is significant at 10% level, the coefficients on
INTPMT and POLITY are statistically insignificant. The increased value of R-squared
(=0.94) shows the models explaining power has increased with the introduction of
country fixed effects.
6.3.2. CFEM - Low Income Countries
From regression 6 (Table 5), we observe that the coefficient on LNCPI (= 2.85) is
positive, much stronger than before, and most importantly, it is statistically significant.
This implies that with one percentage point increase in CPI, the percentage of population
living below the poverty line increases by 2.85%. This confirms that even in the case of
low income countries, an increase in the price level increases the poverty head count
ration. Among the control variables, the coefficient on LNGDPPC has the usual negative
sign and is statistically significant at 1% level. Although coefficients on POLITY and
SECSCHENR maintain the usual negative sign, they become statistically insignificant.
The coefficient on INTPMT changes its sign from negative in the previous models to
positive in this model, which is as per my expectation but it is statistically insignificant.
29
Table 5. Results from the Panel Least Squared Model (PLS) with Country Fixed Effects (CFE)
Dependent Variable: Population Head Count Ratio (% of Population Living Below the Poverty Line)
Number
of
Regression Income Model Independent Coefficient Standard Probab R- Durbin- Observati
Number Level Type Variable s Error t-statistic ility Squared Watson ons
5 All Countries PLS (CFE)* LNCPI 1.162411 0.288422 4.030237 0.0001 0.9399 1.0067 604
LNGDPPC -12.66681 1.468067 -8.62823 0
INTPMT -0.063278 0.247568 -0.2556 0.7984
SECSCHENR -0.092148 0.051825 -1.77805 0.076
POLITY -0.0442 0.095894 -0.46092 0.6451
6 Low Income PLS (CFE)* LNCPI 2.846934 0.531367 5.357758 0 0.8507 1.03909 251
LNGDPPC -21.96211 1.976445 -11.1119 0
INTPMT 0.230296 0.399798 0.57603 0.5652
SECSCHENR -0.048732 0.134235 -0.36303 0.717
POLITY -0.093014 0.123823 -0.75119 0.4534
Lower Middle
7 Income PLS (CFE)* LNCPI 0.652668 0.177218 3.682858 0.0003 0.90424 1.12484 254
LNGDPPC -8.126109 1.928995 -4.21261 0
INTPMT 0.055451 0.333021 0.166508 0.8679
SECSCHENR -0.133459 0.064308 -2.07533 0.0393
POLITY -0.037485 0.190366 -0.19691 0.8441
Upper Middle
8 Income PLS (CFE)* LNCPI 0.628462 0.224339 2.8014 0.0064 0.90637 1.22119 102
LNGDPPC -3.937402 1.44215 -2.73023 0.0078
INTPMT 0.166656 0.241483 0.690135 0.4922
SECSCHENR -0.083783 0.061186 -1.3693 0.1748
POLITY 0.005319 0.075106 0.070817 0.9437
* PLS: Panel Least Squared Model, CFE: Country Fixed Effects

30
The reason for which I expect to see a positive relationship between external debt
and poverty is that external debt, although viewed as an instrument for financing
economic growth, does not contribute significantly to financing economic development in
developing countries (Ayadi and Ayadi, 2008). Rather than help improve the economic
performance of a country, in developing countries, external debt becomes a burden on
the economy. Nakatami and Herera (2007) argue that external debt becomes a self-
perpetuating mechanism of poverty aggravation, work over-exploitation and a constraint
on development in developing economies. However, as the coefficient on INTPMT is not
statistically significant, I cannot make any conclusion, at this point, about the effect of
external debt on poverty. Overall, the increased value of R-squared (= 0.85) gives more
credibility to the model.
From regression 7 we find that the coefficient on LNCPI is positive and
statistically significant. The coefficient on LNGDPPC has the expected negative sign
and is statistically significant. The coefficient on INTPMT has the expected positive sign
and the coefficient on SECSCHENR has the expected negative sign but both these are
statistically insignificant. The coefficient on the POLITY score has positive sign but
statistically insignificant. The model has a high value of R-squared = 0.90 which means
that in the country fixed effects model, the independent variables explain 90% of the
variation in the dependent variable. Similarly, regression 8 analyzes the case of upper
middle income countries. The results from upper middle income countries are not
significantly different from that of the lower middle income countries.
To sum up the country fixed effects model, the coefficients on LNCPI,

SECSCHENR, and LNGDPPC have the consistent signs and levels of statistical
significance. The values of R-squared have increased significantly as compared to the
model without the country fixed effects. This study, so far, allows us safely say that
inflation has a positive correlation with poverty. An increase in the price level increases
poverty and hence a decrease in the overall price would help reduce poverty.
6.4. PERIOD FIXED EFFECTS MODEL
From the period fixed effects model (#9) in Table 6 for all countries, I find that
CPI has a statistically significant and positive relationship with poverty while GDP and
secondary school enrollment both show consistent and statistically significant negative
relationship with poverty. Although the coefficient on INTPMT is negative, it is
31
statistically insignificant. The negative sign of the coefficient on POLITY is expected,

but because it is statistically insignificant, we cannot establish any meaningful
relationship between the polity score and poverty in this case. For this regression, the
value of the R-squared which is equal to 0.69 is also not very good. This regression has
a similar explaining power as the initial regression without any fixed effects.
So to test the significance of period fixed effects model, I perform the F-ratio test
comparing the present model with the initial model without any fixed effects. F(134,
1210) = 0.1430 which is much lower than the critical F-ratio (=1) with 134 and 1210
degrees of freedom. Hence, it appears that period fixed effects model has no particular
significance, in this case.
6.5. COUNTRY AND PERIOD FIXED EFFECTS MODEL
From Table 7, we can see that inflation has a positive relationship with poverty. A
coefficient of 1.27 on LNCPI means that if inflation increases by 1%, an additional 1.27%
people fall below the poverty line. GDP per capita has a negative relationship with
poverty. The coefficient (= -9.67) on LNGDPPC shows that if the per capita annual
income increases by 1%, poverty declines by 9.67% i.e. almost 10% people rise above
the poverty line who were previously below the line.. All other coefficients are negative
just as in the model with period fixed effects. However, we cannot infer much from these
coefficients, since none of these coefficients are statistically significant. The model has R-
squared = 0.94. This means that the independent variables can explain 94% of the
variation in the dependent variable.
As I go to different income categories, I find that the coefficients on LNCPI and

LNGDPPC have expected signs in all the cases. However, in the case of Lower Middle
income countries, the coefficient on LNCPI is statistically significant only at 9% level and
insignificant in the case of Upper Middle income countries. These apart, the coefficients
on INTPMT, SECSCHENR, and POLITY show inconsistent signs and in most cases are
not statistically significant.
6.8. DYNAMIC PANEL MODELS
The dynamic models, which include one period lag of the dependent variable as an
independent variable, are expected to capture those effects which have not been
otherwise accounted for. This way the models will have the least autocorrelation, if any,
32
Table 6. Results from the Panel Least Squared Model (PLS) with Period Fixed Effects (PFE)
Dependent Variable: Population Head Count Ratio (% Population Living Below the Poverty Line)
Regression Income Model Independent Standard R- Durbin- Number of
Number Level Type Variable Coefficients Error t-statistic Probability Squared Watson Observations
9 All Countries PLS (PFE)* LNCPI 0.493902 0.22813 2.164999 0.0308 0.6907 0.2036 604
LNGDPPC -11.83688 3.523055 -3.35983 0.0008
INTPMT -0.54959 0.67049 -0.81969 0.4127
SECSCHENR -0.446293 0.106834 -4.17744 0
POLITY -0.097184 0.224358 -0.43317 0.6651
10 Low Income PLS (PFE)* LNCPI 1.168366 1.466905 0.796483 0.4266 0.46639 0.31085 251
LNGDPPC -6.597678 4.345877 -1.51815 0.1303
INTPMT -1.282053 1.371238 -0.93496 0.3508
SECSCHENR -0.439316 0.09223 -4.76325 0
POLITY 0.40948 0.288208 1.420781 0.1567
Lower Middle
11 Income PLS (PFE)* LNCPI 0.465184 0.30581 1.521155 0.1295 0.39362 0.17114 254
LNGDPPC -11.25981 3.522163 -3.19685 0.0016
INTPMT 0.392832 0.961903 0.408391 0.6834
SECSCHENR -0.272239 0.103041 -2.64204 0.0088
POLITY -0.18635 0.368171 -0.50615 0.6132
Upper Middle
12 Income PLS (PFE)* LNCPI 0.972672 0.377486 2.576708 0.0117 0.4312 0.3564 102
LNGDPPC -6.127081 2.089044 -2.93296 0.0043
INTPMT -1.601784 0.571874 -2.80094 0.0063
SECSCHENR -0.248357 0.04427 -5.61002 0
POLITY 0.260861 0.166708 1.564779 0.1213
* PLS: Panel Least Squared Model, CFE: Country Fixed Effects, PFE: Period Fixed Effects
33
Table 7. Results from the Panel Least Squared Model (PLS) with Country and Period Fixed Effects (CFE + PFE)
Number
of
Regression Income Model Independent Standard R- Durbin- Observ
Number Level Type Variable Coefficients Error t-statistic Probability Squared Watson ations
PLS
13 All Countries (CFE+PFE)* LNCPI 1.265397 0.383906 3.296113 0.0011 0.94255 1.01906 604
LNGDPPC -9.668968 2.024449 -4.7761 0
INTPMT -0.166065 0.316638 -0.52446 0.6002
SECSCHENR -0.063656 0.045833 -1.38888 0.1655
POLITY -0.01902 0.078948 -0.24092 0.8097
PLS
14 Low Income (CFE+PFE)* LNCPI 3.381219 1.103599 3.063812 0.0025 0.86463 1.0875 251
LNGDPPC -14.57654 4.401135 -3.312 0.0011
INTPMT -0.385703 0.57731 -0.6681 0.5049
SECSCHENR 0.063149 0.119303 0.529315 0.5972
POLITY 0.072478 0.127564 0.568172 0.5706
Lower Middle PLS
15 Income (CFE+PFE)* LNCPI 0.53749 0.318155 1.689397 0.0928 0.905907 1.091 254
LNGDPPC -9.75545 4.542895 -2.14741 0.033
INTPMT 0.149295 0.335323 0.445227 0.6567
SECSCHENR -0.142756 0.069834 -2.04423 0.0423
POLITY -0.112918 0.204252 -0.55284 0.581
Upper Middle PLS
16 Income (CFE+PFE)* LNCPI 0.137847 0.325757 0.423158 0.6735 0.92556 1.2046 102
LNGDPPC -9.828058 3.468942 -2.83316 0.006
INTPMT -0.03683 0.245805 -0.14983 0.8813
SECSCHENR -0.11478 0.062203 -1.84525 0.0693
POLITY -0.053184 0.102946 -0.51662 0.6071
* PLS: Panel Least Squared Model, CFE: Country Fixed Effects, PFE: Period Fixed Effects
Note: Estimates are Consistent with White's Heterogeneity Test
34
among the residuals. Further, the inclusion of lagged dependent variable as a regressor
would help us understand whether poverty at a given period is mainly because of
poverty in the previous period. Tables 8 through 11 record the results from regression
analyses with dynamic panel models. First, the results from the pooled regression is
presented in Table 8, then results from the dynamic panel regression with country fixed
effects is tabulated in Table 9, the regression with period fixed effects in Table 10 and
finally, Table 11 includes the results from regression analysis with both country and
period fixed effects.
6.8.1. Dynamic Panel Data Analysis (All Countries)
From regression 17, it is clear that after the inclusion of lagged dependent
variable (LAGPOPBPL) in the set of regressors, the effect of inflation on poverty is
small but still positive, as the coefficient on LNCPI is merely 0.04. However, the
coefficient is statistically insignificant. The one period lagged value of the poverty
determines 0.85% of the variation in the poverty level in the current year. One percent
increase in the level of poverty in the previous period can increase the poverty level by
0.85% in the current period. The coefficient is statistically significant at 1% level. The
coefficient on LNGDPPC has a negative sign which is consistent with the previous
observations. The coefficient is statistically almost significant at 5% level. Educational
attainment has a small but negative effect on poverty which is statistically significant.
Besides these, the coefficients on INTPMT and POLITY have expected signs but they
are not statistically significant. The value of R-squared (= 0.936) for this regression is
also high which means that about 94% of the variations in the dependent variable can
be explained by the independent variables.
6.8.2. Dynamic Panel Data Analysis (Low Income Countries)
From regression 18 on Table 8, we can see that in the case of low income
countries, an increase in CPI affects poverty negatively but as the coefficient is not
statistically significant, we cant rely much on the coefficient. Lag of the poverty variable
has a strong, positive, and statistically significant impact on poverty. The relationship of
all other independent variables with poverty is similar to the case with all countries.
Although the coefficients on the other control variables are similar to those observed
previously, the negative coefficient on the inflation seems a bit puzzling. A negative
coefficient on LNCPI means that an increase in inflation is associated with reduced
35
Table 8. Results from the Dynamic Panel Least Squared Model (DPLS)
Regres
sion Income Model Independent Standard Durbin- Number of
Number Level Type Variable Coefficients Error t-statistic Probability R-Squared Watson Observations
17 All Countries DPLS* LNCPI 0.039339 0.07656 0.513829 0.6076 0.9368 1.8744 549
LAGPOPBPL 0.858748 0.021438 40.05728 0
LNGDPPC -1.400495 0.719884 -1.94545 0.0522
INTPMT 0.122117 0.176251 0.692859 0.4887
SECSCHENR -0.051342 0.015254 -3.36592 0.0008
POLITY -0.023485 0.042039 -0.55864 0.5766
18 Low Income DPLS* LNCPI -0.88917 0.559781 -1.58842 0.1136 0.826289 1.600671 230
LAGPOPBPL 0.803011 0.043594 18.42 0
LNGDPPC -1.771309 0.681516 -2.59907 0.01
INTPMT 0.055453 0.417317 0.132881 0.8944
SECSCHENR -0.070115 0.028257 -2.4813 0.0138
POLITY 0.015917 0.087007 0.182941 0.855
Lower Middle
19 DPLS* LNCPI 0.107548 0.079134 1.359072 0.1755 0.91058 2.6028 228
Income
LAGPOPBPL 0.879317 0.018125 48.51356 0
LNGDPPC 0.335204 1.160099 0.288944 0.7729
INTPMT 0.239162 0.151052 1.583314 0.1148
SECSCHENR -0.050944 0.025399 -2.00577 0.0461
POLITY -0.03403 0.063074 -0.53953 0.5901
Upper Middle
20 DPLS* LNCPI 0.046129 0.128254 0.359667 0.72 0.896152 2.3385 93
Income
LAGPOPBPL 0.879621 0.057583 15.27583 0
LNGDPPC -2.295673 0.506938 -4.52851 0
INTPMT 0.002661 0.147135 0.018086 0.9856
SECSCHENR 0.006393 0.017494 0.365443 0.7157
POLITY -0.018737 0.066727 -0.2808 0.7795
* PLS: Panel Least Squared Model, DPLS: Dynamic Least Squared Model
36
levels of poverty. This may have many different explanations. First, since poverty has a
negative correlation with income, one can argue that the governments in the low
income countries might be following expansionary monetary policies to boost economic
growth (Sullivan and Sheffrin, 2003) and reduce poverty and hence there is a negative
relationship between poverty and inflation.
Another possible explanation is that in the low income countries, along with other
countries, poverty is declining (Figure 1). More people can afford goods and services that
were previously out of their reach. So demand for essential commodities is increasing at
a higher rate in low income countries. Thus, reduced levels of poverty are pushing
demands for consumer goods and services up. As a result, the prices increase and
hence, a negative relationship between poverty level and inflation maybe observed in the
case of low income countries.
Some other convincing explanations justifying a negative relationship between

inflation and poverty have been offered by a UN report ((Rethinking Poverty, UN Report
on the World Social Situation 2010). The report argues that if inflation reduces real
wages, then employment should rise, creating more income-earning opportunities for
workers. Therefore, the employment effect of inflation (creating more jobs because of
lower labor costs) can outweigh the real-wage effect (lower income) on poverty. This is
likely to be the case, as the inflation (real wage) elasticity of poverty is found to be
significantly less than the output (employment) elasticity of poverty. Furthermore, most
of the poor are net debtors and inflation reduces the real value of their debt. So this
way inflation may have a negative correlation with poverty.
Apart from the theoretical arguments, there are empirical evidences supporting
the view that inflation can have a negative correlation with poverty, at least in particular
situations, if not in general. For example, Romer (1998) found evidence that in the case
of the United States, inflation has a negative correlation with poverty in the short run.
So there is a possibility that under certain circumstances, an increase in inflation may
be associated with a decline in poverty.
6.8.3. Dynamic Panel Data Analysis (Lower Middle Income Countries)
The results from regression 19 show evidence that in the case of lower middle
income countries, the price level has a positive relationship with poverty. However, this
37
time again, the coefficient is not significant. The relationship of other control variables,
except GDP per capita, with the dependent variable is similar to what is observed in the
case of all countries. One interesting observation is that, in this case, LNGDPPC has a
positive coefficient. This does not make much sense, although there are direct
evidences that in some cases poverty increases despite increase in GDP per capita.
For example, in the case of Albania, the poverty head count ratio was 0.17% in 1981
which grew 0.85% in 2005. The poverty nearly increased by 5 times in that period in
Albania.
Another country in the lower middle income range, Armenia, recorded a very
low poverty head count ratio of 0.87 in 1981 which increased to a maximum of 24.29%
in 1993 and then declined to 4.74% in 2005. The same trend is recorded in the case of
Bolivia where the poverty head count ratio was 1.99% in 1981 which rose to 26.27 in
1999 and slowly declined to 15.61% in 2008. However, in the period under
consideration, the GDP per capita also increased over time in all these countries.
Cases like these may have led to a positive correlation between GDP per capita and
poverty level. The reason behind such a positive relationship between income and
poverty may be due to increased inequality. To see the average effect of an increase in
GDP per capita, we need to consider the country fixed effects model which, I believe,
will explain the relationships more accurately.
6.8.4. Dynamic Panel Data Analysis (Upper Middle Income Countries)
The regression results for upper middle income countries show that inflation has
a small and positive but statistically insignificant impact on poverty. The relationship
between previous periods poverty level and current period poverty level is positive and
significant. The other coefficients, except SECSCHENR, show expected signs but the
coefficients are really small and statistically insignificant. So the overall learning from
the dynamic panel models is that inflation may have a positive correlation with poverty
but as the previous periods poverty has a significant bearing on the current years
poverty level, the correlation of poverty with inflation becomes almost insignificant.
However, as there is a great deal of heterogeneity among countries in this income
group, a country fixed effects model may do a better job of explaining the relationship
between the independent variables and the dependent variable.
38
6.8.5. Dynamic Panel Data Analysis with Country Fixed Effects
Table 9 records the results from regressions 21 through 24 which account for
country fixed effects models for respective regions. The foremost observation from this
analysis is that LNCPI has positive coefficients in all cases, and with country fixed
effects, the coefficients are significant in three cases, although it is statistically
insignificant in the case of lower middle income countries. Lag of poverty has a
significant positive coefficient in all cases. The coefficients on LNGDPPC and POLITY
are negative as expected. The other two coefficients are either inconsistent with the
previous results or statistically insignificant. Summarily, one can say that the dynamic
country fixed effects model reaffirms the broad conclusions drawn from the previous
models that increase CPI and the level of previous periods poverty affect poverty
positively, whereas an increase GDP per capita, in general, leads to a decline in
poverty level.
6.8.6. Dynamic Panel Data Analysis with Period Fixed Effects
From the period fixed effects models for different regions (regressions 25 - 28),
the general observation is that CPI increase has a positive effect on poverty, with the
exception of Low Income countries. In the case of Low Income countries, the negative
coefficient on LNCPI indicates that poverty decreases as inflation increases. However,
the coefficient is not statistically significant. The lag of the poverty variable has a
positive correlation with poverty in all the cases. This implies that poverty in the current
period is mostly a result of poverty in the previous period. However, in the case of other
control variables, the results are either not as expected or they are not statistically
significant. From my previous experience, I have learnt that with this dataset the period
fixed effects model is not a good fit. So I move on to the country plus period fixed
effects.
6.8.7. Dynamic Panel Data Analysis with Country and Period Fixed Effects
Table 11 shows that after accounting for the country and period fixed effects,
the relationship between poverty and inflation is significant and positive in the case of
all countries together but negative in the case of low income countries, in particular. In
other cases, the coefficients are positive but not statistically significant. That means,
overall, an increase in the price level increases the poverty head count ratio. However,
39
Table 9: Results from the Dynamic Panel Least Squared Model with Country Fixed Effects
Number
of
Regression Income Model Independent Standard R- Durbin- Obser
Number Level Type Variable Coefficients Error t-statistic Probability Squared Watson vations
All
21 DPLS (CFE)* LNCPI 0.486573 0.181706 2.677809 0.0077 0.9593 2.1047 549
Countries
LAGPOPBPL 0.534189 0.069415 7.695547 0
LNGDPPC -7.103239 1.217766 -5.83301 0
INTPMT -0.142733 0.180676 -0.789993 0.43
SECSCHENR -0.023481 0.051859 -0.452785 0.6509
POLITY -0.173688 0.084797 -2.048284 0.0411
Low
22 DPLS (CFE)* LNCPI 1.567205 0.529492 2.959828 0.0035 0.896957 1.92696 230
Income
LAGPOPBPL 0.477473 0.080852 5.905551 0
LNGDPPC -14.64708 2.037102 -7.190155 0
INTPMT -0.32488 0.403193 -0.805766 0.4214
SECSCHENR 0.052106 0.137984 0.377627 0.7061
POLITY -0.239091 0.107486 -2.224385 0.0273
Lower
23 Middle DPLS (CFE)* LNCPI 0.219379 0.171368 1.280161 0.2021 0.933523 2.5427 228
Income
LAGPOPBPL 0.563072 0.126671 4.445139 0
LNGDPPC -2.690344 2.367944 -1.136152 0.2574
INTPMT 0.06623 0.218132 0.303622 0.7618
SECSCHENR -0.08242 0.050414 -1.634872 0.1038
POLITY -0.138709 0.119393 -1.161785 0.2469
Upper
24 Middle DPLS (CFE)* LNCPI 0.482027 0.131795 3.657399 0.0005 0.9244 1.9839 93
Income
LAGPOPBPL 0.412007 0.091543 4.500681 0
LNGDPPC -3.616913 0.905887 -3.992673 0.0002
INTPMT 0.146233 0.181648 0.805033 0.4235
SECSCHENR -0.033277 0.048603 -0.684667 0.4958
POLITY -0.059069 0.074639 -0.791397 0.4313
* PLS: Panel Least Squared Model, DPLS: Dynamic Least Squared Model, CFE: Country Fixed Effects
40
Table 10: Results from the Dynamic Panel Least Squared Model with Period Fixed Effects
Number
Regres of
sion Income Model Independent Standard R- Durbin- Obser
25 All Countries DPLS (PFE)* LNCPI 0.660704 0.249601 2.64704 0.0084 0.961159 2.1458 549
LAGPOPBPL 0.528258 0.06515 8.108341 0
LNGDPPC -2.979227 1.879349 -1.585245 0.1136
INTPMT -0.191592 0.231789 -0.826578 0.4089
SECSCHENR 0.004975 0.051039 0.097465 0.9224
POLITY -0.130868 0.071011 -1.842918 0.066
26 Low Income DPLS (PFE)* LNCPI -0.276808 0.730488 -0.378936 0.7051 0.833201 1.62755 230
LAGPOPBPL 0.798808 0.053762 14.85822 0
LNGDPPC -1.3568 1.583483 -0.856845 0.3925
INTPMT -0.315741 0.41467 -0.761428 0.4472
SECSCHENR -0.066213 0.054726 -1.209902 0.2276
POLITY 0.066166 0.121894 0.542813 0.5878
Lower Middle
27 DPLS (PFE)* LNCPI 0.11721 0.082886 1.414106 0.1588 0.915796 2.6306 228
Income
LAGPOPBPL 0.888865 0.019874 44.72513 0
LNGDPPC 0.649963 1.284164 0.506138 0.6133
INTPMT 0.231147 0.136372 1.694969 0.0915
SECSCHENR -0.044757 0.024112 -1.856224 0.0648
POLITY -0.023337 0.053632 -0.435135 0.6639
Upper Middle
28 DPLS (PFE)* LNCPI 0.025815 0.165053 0.156407 0.8761 0.916953 2.2966 93
Income
LAGPOPBPL 0.881657 0.063104 13.97145 0
LNGDPPC -1.450361 1.482947 -0.978026 0.3311
INTPMT -0.092258 0.168588 -0.54724 0.5858
SECSCHENR 0.001143 0.019452 0.058747 0.9533
POLITY 0.038217 0.079074 0.483304 0.6302
* PLS: Panel Least Squared Model, DPLS: Dynamic Least Squared Model, CFE: Country Fixed Effects, PFE: Period Fixed Effects
41
Table 11: Results from the Dynamic Panel Least Squared Model with Country and Period Fixed Effects
Regress Number of
Ion Income Model Independent Standard R- Durbin- Obser
PLS (CFE
29 All Countries + PFE)* LNCPI 0.660704 0.249601 2.64704 0.0084 0.9611 2.145865 549
LAGPOPBPL 0.528258 0.06515 8.108341 0
LNGDPPC -2.979227 1.879349 -1.585245 0.1136
INTPMT -0.191592 0.231789 -0.826578 0.4089
SECSCHENR 0.004975 0.051039 0.097465 0.9224
POLITY -0.130868 0.071011 -1.842918 0.066
PLS (CFE
30 Low Income + PFE)* LNCPI 2.790081 0.724459 3.851258 0.0002 0.9068 2.0151 230
LAGPOPBPL 0.444839 0.080433 5.53057 0
LNGDPPC -6.38478 2.715784 -2.350989 0.0198
INTPMT -0.94673 0.475299 -1.991861 0.0479
SECSCHENR 0.139218 0.128554 1.082954 0.2803
POLITY -0.110539 0.087192 -1.267763 0.2066
Lower Middle PLS (CFE
31 Income + PFE)* LNCPI 0.306923 0.292128 1.050644 0.2949 0.93713 2.5957 228
LAGPOPBPL 0.592808 0.131511 4.507683 0
LNGDPPC -1.026925 5.222913 -0.196619 0.8444
INTPMT 0.120265 0.218647 0.550039 0.583
SECSCHENR -0.052103 0.060303 -0.86402 0.3888
POLITY -0.180315 0.105899 -1.702707 0.0904
Upper Middle PLS (CFE
32 Income + PFE)* LNCPI 0.17149 0.246897 0.69458 0.4899 0.938828 1.939347 93
LAGPOPBPL 0.424739 0.10228 4.152722 0.0001
LNGDPPC -6.296073 3.988461 -1.578572 0.1194
INTPMT 0.013987 0.254243 0.055013 0.9563
SECSCHENR -0.053694 0.050517 -1.062897 0.2919
POLITY -0.035597 0.103834 -0.34283 0.7329
* PLS: Panel Least Squared Model, DPLS: Dynamic Least Squared Model, CFE: Country Fixed Effects, PFE: Period Fixed Effects
42
percentage of population living below the poverty line decreases as inflation increases.
The level of poverty in the previous period is a significant determinant of poverty in the
current period. GDP per capita and polity score affect poverty negatively. The
relationship between external debt and poverty is not consistent. In some cases it is
positive while in other cases, it is negative. Educational attainment also fails the
robustness check.
6.9. SUMMARY OF THE RESULTS AND DISCUSSION
Table 12 summarizes the regression results from the entire study. The table at
first records the findings from analysis with all the countries and then from countries of
different income groups separately. The dependent variable is the percentage of
population living below the poverty line. In the first row, the first column in each case
enlists the independent variable, second (column) indicates that the coefficients in the
subsequent rows are from panel list squared models (PLS). The third column records
results from the country fixed effects model (PLS-CFE), the fourth column records results
from period fixed effects model (PLS-PFE), and the fifth column shows the results from
models with both country and period fixed effects (PLS-CFE+PFE). Similarly, the sixth,
seventh, eighth, and ninth columns respectively record the results from the dynamic
panel model all different specifications. Inside each little rectangle, the value on the top is
the estimated coefficient, the (*) on the superscript gives the level of statistical
significance, the value below the coefficient within the parenthesis ( ) is the standard
error, and X denotes the case where the coefficient is not available or applicable.
To sum up the results, in the case of all countries combined, inflation has a
positive relationship with poverty in all the cases. This result is similar to the findings of
Cardoso (1992), Powers (1995), Ravallion (1998), Braumann (2004), Chaudhary and
Chaudhary (2008), and Chani, et. al. (2011) that there is a positive correlation between
price level and poverty. The relationship between GDP per capita and poverty is negative
and is robust in all specifications. My findings fall in line with those of Barro and Martin
(1995), Todaro (1997), Norton (2002), to name a few. I find that quality of governance
has a negative relationship with poverty.This is also in agreement with previous works
such as Varshney (1999) and Kamal (2000) as discussed in the previous section.
External debt and educational attainment have negative relationship with poverty in
almost all cases. I have tried to explain the negative relationship between external debt
43
Table 12: Summary Results

Dependent Variable: Percentage of Population Living Below the Poverty Line
ALL COUNTRIES
PLS+ DPLS+
Independent PLS+ PLS+ DPLS+ DPLS+
PLS1 CFE DPLS1 CFE
Variables CFE1 PFE1 CFE PFE
+PFE +PFE
0.671*** 1.162*** 0.493** 1.265*** 0.039 0.486*** 0.660*** 0.660***
CPI Inflation (LNCPI)
(0.144) (0.288) (0.228) (0.383) (0.076) (0.181) (0.249) (0.249)
Lag of POPBPL 0.858*** 0.534*** 0.528*** 0.528***
X X X
(LAGPOPBPL) X (0.021) (0.069) (0.065) (0.065)
GDP per Capita -11.60*** -12.666*** -11.836*** -9.668*** -1.400** -7.103*** -2.979* -2.979*
(LNGDPPC) (0.586) (1.468) (3.523) (2.024) ((0.719) (1.217) (1.879) (1.879)
External Debt -0.880*** -0.063 -0.549 -0.166 0.122 -0.142 -0.191 -0.191
(INTPMT) (0.275) (0.247) (0.670) (0.316) (0.176) (0.180) (0.231) (0.231)
School Enrollment -0.434*** -0.092* -0.446*** -0.063 -0.051*** -0.023 0.004 0.004
(SECSCHENR) (0.027) (0.051) (0.106) (0.045) (0.015) (0.051) (0.051) (0.051)
-0.155*** -0.044 -0.097 -0.019 -0.023 -0.173** -0.130** -0.130**
Governance (POLITY)
(0.056) (0.095) (0.224) (0.078) (0.04) (0.084) (0.071) (0.128)
LOW INCOME COUNTRIES
0.174 2.846*** 1.168 3.381*** -0.889* 1.567 -0.276 2.790***
(0.766) (0.531) (1.466) (1.103) (0.559) (0.529) (0.730) (0.724)
Lag of POPBPL 0.803*** 0.477 0.798*** 0.444***
X X X X
(LAGPOPBPL) (0.043) (0.080) (0.053) (0.080)
GDP per Capita -7.173*** -21.962*** -6.597 -14.576*** -1.771*** -14.647 -1.356 -6.384***
(LNGDPPC) (1.539) (1.976) (4.345) (4.401) (0.681) (2.037) (1.583) (2.715)
External Debt -0.517 0.230 -1.282 -0.385 0.055 -0.324 -0.315 -0.946**
(INTPMT) (0.752) (0.399) (1.371) (0.577) (0.417) (0.403) (0.414) (0.475)
School Enrollment -0.473*** -0.048 -0.439*** 0.063 -0.070*** 0.052 -0.066 0.139
(SECSCHENR) (0.045) (0.134) (0.092) (0.119) (0.028) (0.137) (0.054) (0.128)
Governance 0.259** -0.093 0.409 0.072 0.015 0.239** 0.066 -0.110
(POLITY) (0.124) (0.123) (0.288) (0.127) (0.087) (0.107 (0.121) (0.087)
LOWER MIDDLE INCOME COUNTRIES
0.594*** 0.652*** 0.465 0.537* 0.107 0.219 0.117 0.306
(0.133) (0.177) (0.305) (0.318) (0.079) (0.171) (0.082) (0.292)
Lag of POPBPL 0.879*** 0.563*** 0.888*** 0.592***
X X X X
(LAGPOPBPL) (0.018) (0.126) (0.019) (0.131)
GDP per Capita -9.999*** -8.126*** -11.259*** -9.755** 0.335 -2.690 0.649 -1.026
(LNGDPPC) (1.786) (1.928) (3.522) (4.542) (1.160) (2.367) (1.284) (5.229)
External Debt -.004 0.055 0.392 0.149 0.239 0.066 0.231* 0.120
(INTPMT) (0.463) (0.333) (0.961) (0.335) (0.151) (0.218) (0.136) (0.218)
School Enrollment -0.251*** -0.133** -0.272*** -0.142** -0.050** -0.082* -0.044** -0.052
(SECSCHENR) (0.040) (0.064) (0.103) (0.069 (0.025) (0.050) (0,024) (0.060)
Governance -0.112** -0.037 -0.186 -0.112 -0.034 -0.138 -0.023 -0.180*
(POLITY) (0.049) (0.190) (0.368) (0.204) (0.063) (0.119) (0.053) (0.105)
1
PLS: Panel Least Squared Model, CFE: Country Fixed Effects, PFE: Period Fixed Effects, and DPLS: Dynamic Panel
Least Squared Model
2
Numbers in the parentheses indicate the standard errors.
(***), (**), and (*) indicate that the coefficients are statistically significant at 1%, 5% and 10% levels respectively.
44
Table 12: Summary Results (Table continued)

Dependent Variable: Percentage of Population Living Below the Poverty Line
UPPER MIDDLE INCOME COUNTRIES
PLS+ DPLS+
Independent PLS+ PLS+ DPLS+ DPLS+
PLS1 CFE DPLS1 CFE
Variables CFE1 PFE1 CFE PFE
+PFE +PFE
0.940*** 0.628*** 0.972*** 0.137 0.046 0.482*** 0.025 0.171
(0.176) (0.224) (0.377) (0.325) (0.128) (0.131) (0.165) (0.246)
Lag of POPBPL 0.879 0.412*** 0.881*** 0.424***
X X X X
(LAGPOPBPL) (0.057) (0.091) (0.063) (0.102)
GDP per Capita -5.301*** -3.937*** -6.127*** -9.828*** -2.295 -3.616*** -1.450 -6.296*
(LNGDPPPC) (1.358) (1.442) (2.089) (3.468) (0.506) (0.909) (1.482) (3.988)
External Debt -1.056*** 0.166 -1.601*** -0.036 0.002 0.146 -0.092 0.013
(INTPMT) (0.434) (0.241) (0.571) ((0.245) (0.147) (0.181) (0.168) (0.254)
School Enrollment -0.252*** -0.083 -0.248*** -0.114* 0.006 -0.006 0.001 -0.053
(SECSCHENR) (0.040) (0.061) (0.044) (0.062) (0.017) (0.048) (0.019) (0.050)
Governance 0.198 0.005 0.260 -.053 -0.008 -0.059 0.038 -0.035
(POLITY) (0.126) (0.075) (0.166) (0.102) 0.0187 (0.074) (0.079) (0.103)
1
PLS: Panel Least Squared Model, CFE: Country Fixed Effects, PFE: Period Fixed Effects, and DPLS: Dynamic Panel
Least Squared Model
2
Numbers in the parentheses indicate the standard errors.
(***), (**), and (*) indicate that the coefficients are statistically significant at 1%, 5% and 10% levels respectively.
and poverty in the results section. Educational attainment shows positive relationship with
poverty level in a couple of cases. However, the coefficients are extremely small (of the
order of 0.004) and statistically insignificant. In the case of low income countries, inflation
shows positive relationship with poverty in 8 out of 10 specifications. The only two cases
in which inflation shows a negative relationship with poverty is the dynamic panel case
and the dynamic panel case with period fixed effects. However, with the dynamic panel
model, the coefficient on LNCPI is statistically significant only at 12% level of significance
and in the dynamic panel model with period fixed effect the coefficient is small (= 0.28)
as compared to other specifications and is statistically insignificant. Thus, the positive
relationship between inflation and poverty is not significant in either case. GDP per capita
shows a consistent negative relationship with poverty in all the specifications. The
coefficients on the other control variables are either inconsistent or statistically
insignificant or both. I have tried to provide some possible explanations in each case in
the result section.
In the case of lower and upper middle income countries, inflation shows a
consistent positive relationship in all the specifications. However, the GDP per capita
loses its consistency in sign in the case of lower middle income countries. Educational
attainment and polity show consistent negative relationship with poverty in the case of
lower middle income countries, however, external debt fails the robustness checks.
45
In the case of upper middle income countries, inflation and GDP per capita
consistently show positive and negative signs respectively. Other than these, the
coefficients on all other control variables are either inconsistent or statistically
insignificant or both. A striking observation comes from the dynamic models. In all the
cases where the lag of poverty (LAGPOPBPL) has been used as an independent
variable, it shows a strong, positive, and statistically significant coefficient. This means,
present poverty, inevitably, is a result of past poverty.
Most of the findings from this study are similar to what other researchers have
found in the past. So the question arises here is: What is new about this study? One of
the most salient features of my study is the dataset I have used. Poverty data is hard to
find for a large number of countries. So, in that sense, the first thing about my study is
that it makes use of a large dataset developed by the World Bank with the help of
POVCALNET - an interactive poverty analysis software. I cover 115 countries, for the
period 1981 - 2008. Since the most updated version of this dataset was released in
February, 2012, and I have used this in my study, it is one of the most up-to-date and
comprehensive studies, in terms of coverage, thus far, on poverty and inflation.
As the dataset has one of the widest cross-sections of countries, my result is also
highly generic. So, considering the case with all the developing countries, I find a positive
relationship between inflation and poverty. Thus, inflation, in general, keeping all else
equal, increases poverty. The second observation is that the effect of inflation on poverty
is not same in all the countries. For instance, although in lower and upper middle income
countries, inflation has a positive relationship with poverty, but in the case of low income
countries, under certain specifications (with dynamic panel model and dynamic panel
model with period fixed effect), inflation has a negative relationship with poverty.
There can be many explanations for the negative relationship between inflation
and poverty. I have discussed about the possible explanations in the results section. But,
to be certain about which explanation is correct, further study is required. However, as
the coefficient, in the latter case, is not statistically significant, I refrain from making any
conclusion. Other than this, inflation, evidently, affects poverty. The higher the level of
inflation, the higher the level of poverty.
The second important realization from my study is that GDP per capita is
negatively correlated with poverty. Higher levels of GDP per capita is associated, in most
46
cases, with lower levels of poverty, with the exception of lower middle income countries
under dynamic panel model and dynamic panel model with period fixed effects. However,
even in the cases where the relationship between income and poverty is positive, the
coefficients are not statistically significant. So growth, at large, is pro-poor. Another
important observation is that in some cases, external debt has a negative relationship
with poverty. This gives me an opportunity to think about the possible role of foreign debt
in fighting poverty. Some countries may be taking loans from international agencies and
other countries and utilizing this debt to fund their poverty reduction programs. This can
lead to a negative relationship between external debt and poverty. Thus, external debt, if
utilized properly, can help fight poverty.
Although I have carried out the analysis of the relationship between inflation and
poverty, along with control variables, I have had to come across many hurdles. One of
the most significant challenges of this study was to find a good dataset. Though some of
the variables were relatively easily available, finding poverty data for a large cross-
section of countries was hard, as many of the countries dont carry out survey or census
on an annual basis. As a result, I chose to take poverty data from the World Banks
(POVCAL) estimates. This data has a limitation: the data is not annual; instead, the data
series obtained from the POVCAL software is tri-annual. This is a very low frequency
data. However, since the data was available for a large number of countries, I chose this
dataset for the poverty data.
Another issue was finding the data for educational attainment. Ideally, I would
prefer to take percentage of high school graduates or college graduates as an indicator of
a countrys level of educational attainment. However, since such data was not available
for a large number of countries, I considered gross secondary school enrollment as a
proxy for educational attainment.
Despite these limitations, I was able to study the effect of inflation and other
control variables for a cross-section of 115 countries. From this study, I conclude that, in
general, inflation affects poverty positively. An increase in inflation pushes more people
below the poverty line. Further, this time I have studied the effect of inflation in countries
with different levels of income by grouping them separately into low income, lower middle
income, and upper middle income countries. By grouping the countries with respect to
their average income, I find that the effect of inflation in different income level is not
47
same. In the case of low income countries, the relationship between inflation and poverty
becomes negative when I account for the period fixed effects orin the dynamic panel
case. This opens up an opportunity to study the relationship in the case of low income
countries in further details. Especially, it would be interesting to study the causality of
such a relationship. Later on, I would also like to study, the effect of inflation in different
geographical regions.
Besides the unavailability of data, shortage of time is another factor. Since I had
to complete this study in a very short period of time, I could not study how or why inflation
affects poverty. From the existing literature, two factors seem to contribute to the
mechanism via which inflation affects poverty. One of the channels is erosion of the value
of the cash holdings and the other channel is the effect of inflation on the real wages.
Some of the studies find that short run rigidity of the nominal wages lead to a positive
relationship between inflation and poverty while others contend that inflation reduces real
wage in the long run and hence the effect of inflation is not a short run concern only. In
future, I would like to study the causality of the inflation and poverty relationship.
48
CHAPTER 7
CONCLUSION
To conclude, I can say that, in general, poverty is positively affected by inflation.
Keeping all else equal, an increase in inflation increases poverty. However, the effect of
inflation on poverty is not a very straightforward. Although in most cases, inflation has
shown positive relationship with poverty, but some of these results are not statistically
significant. In some cases, inflation has shown negative effect on poverty. In lower and
upper middle income countries, inflation has a positive relationship with poverty, but in
the case of low income countries, under certain specifications, inflation has a negative
relationship with poverty. However, the coefficient, in the latter case, is not statistically
significant. This apart, inflation, evidently, affects poverty. The higher the level of inflation,
the higher the level of poverty. Income, on the other hand, is generally negatively
correlated with poverty. An increase in the GDP per capita, leads to fall in the level of
poverty in absolute terms. However, the effect of income on poverty is not statistically
significant in all cases. But poverty in the previous period is a significant determinant of
poverty in the current period. This means that poverty itself is the cause of poverty in
most cases.
49
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Varshney, A. (1998). Democracy and Poverty. The U.K. Department for International
Development, and the Institute of Development Studies, Sussex, U.K.
Wilson, L. (2011), Inflation, the Hidden Tax. The Center for Development. Retrieved from
http://drlwilson.com/articles/inflaton.htm
World Bank Sees Progress Against Extreme Poverty, But Flags Vulnerabilities (February
29, 2012), Press Release No:2012/297/DEC, Retrieved from www.worldbank.org on
2012-05-30.
World Development Report 2000/2001: Attacking Poverty. World Bank, 2000.

Washington, DC.
World Hunger and Poverty Facts and Statistic, 2012. Retrieved from
http://www.worldhunger.org.
53
APPENDIX A
WORLD BANK INCOME BASED
CLASSIFICATION OF COUNTRIES
Bangladesh Guinea-Bissau Nigeria
Benin Haiti Pakistan
Bhutan India Papua New Guinea
Burkina Faso Kenya Rwanda
Burundi Kyrgyz Republic Senegal
Cambodia Lao PDR Sierra Leone

Central African
Republic Liberia Tajikistan
Chad Madagascar Tanzania
Comoros Malawi Timor-Leste

Congo, Democratic
Republic of Mali Togo
Cte d'Ivoire Mauritania Uganda
Ethiopia Mongolia Uzbekistan
Gambia, The Mozambique Vietnam
Ghana Nepal Yemen, Republic of
Guinea Niger Zambia
LOWER MIDDLE INCOME COUNTRIES
Albania Djibouti Macedonia, FYR

Dominican Moldova, Republic
Algeria Republic of
Angola Ecuador Morocco

Egypt, Arab
Armenia Republic of Namibia
54
World bank income based classification of countries,

continued
Azerbaijan El Salvador Nicaragua
Belarus Georgia Paraguay
Bolivia Guatemala Peru

Bosnia and
Herzegovina Guyana Philippines
Brazil Honduras Sri Lanka
Bulgaria Indonesia Suriname
Cameroon Iran, Islamic Rep. Swaziland
Cape Verde Jamaica Thailand
China Jordan Tunisia
Colombia Kazakhstan Turkmenistan
Congo, Republic of Lesotho Ukraine
Costa Rica
Argentina Hungary Russian Federation
Botswana Latvia Slovak Republic
Chile Lithuania South Africa
Costa Rica Malaysia St. Lucia

Trinidad and
Croatia Mexico Tobago
Czech Republic Panama Turkey
Estonia Poland Uruguay
Gabon Romania Venezuela
55
APPENDIX B
DATA SERIES*
Country Year PopBPL GDPPC CPI CPI-Inflation SecSchEnr IntPmt Polity
Bangladesh 1981 44.18 331.261 34.028 19.481 15.35476 0.448016 -4
Bangladesh 1984 46.1 394.136 44.172 10.436 18.76351 0.598025 -7
Bangladesh 1987 47.85 440.744 60.711 10.163 17.97279 0.744642 -5
Bangladesh 1990 49.86 512.997 79.204 11.782 18.03683 0.637689 -5
Bangladesh 1993 50.68 594.82 86.413 5.444 0.472409 6
Bangladesh 1996 48.58 684.698 102.003 0.733 0.476198 6
Bangladesh 1999 54.49 787.812 125.52 3.073 46.79228 0.39889 6
Bangladesh 2002 52.85 920.411 135.637 3.833 50.57927 0.349482 6
Bangladesh 2005 50.47 1,134.02 163.168 7.064 45.71364 0.36831 6
Bangladesh 2008 46.62 1,413.98 204.904 6.031 45.41245 0.28722 -6
Benin 1981 53.47 613.143 32.901 0.795 15.94813 1.217771 -7
Benin 1984 63.03 639.484 35.461 10.265 20.67583 2.359411 -7
Benin 1987 64.5 661.725 35.535 -1.339 15.516 1.535147 -7
Benin 1990 65.98 736.688 37.093 1.112 0.923367 0
Benin 1993 65.8 829.446 41.264 2.888 0.65896 6
Benin 1996 61.75 914.079 70.067 6.914 0.821675 6
Benin 1999 67.29 1,015.97 73.363 -3.244 22.17601 1.032486 6
Benin 2002 47.33 1,135.33 83.476 1.222 27.08993 0.902254 6
Benin 2005 49.99 1,246.24 89.568 3.734 37.07148 0.37267 6
Benin 2008 44.79 1,420.00 103.908 9.897 0.622635 7
Bhutan 1981 47.35 539.701 109.717 9.717 0.001721 -10
Bhutan 1984 45.2 688.929 151.792 8.059 12.02269 0.024114 -10
Bhutan 1987 43.61 1,009.60 185.283 7.912 0.236106 -10
Bhutan 1990 51.01 1,316.27 241.132 9.418 0.763551 -10
Bhutan 1993 47.69 1,584.97 345 8.937 1.046692 -10
Bhutan 1996 47.69 2,048.84 447.264 8.316 0.826704 -10
Bhutan 1999 29.88 2,408.27 553.774 4.504 36.74025 0.562566 -10
Bhutan 2002 46.4 2,944.10 610.504 2.28 48.06704 0.384821 -10
Bhutan 2005 26.79 3,530.80 688.07 4.933 45.43338 0.274235 -6
Bhutan 2008 9.34 4,784.27 828.082 9.035 55.44877 3.087854 3
Burkina Faso 1981 73.02 375.83 37.571 6.543 2.56913 0.683448 -7
Burkina Faso 1984 77.26 406.215 47.067 7.493 3.10093 0.60292 -7
Burkina Faso 1987 72.49 519.512 47.223 2.981 4.97543 0.785626 -7
Burkina Faso 1990 61.92 569.489 48.356 -1.355 6.65229 0.501396 -7
Burkina Faso 1993 71.17 640.299 49.138 2.696 7.75343 0.775964 -5
Burkina Faso 1996 66.96 744.357 70.503 6.931 0.679439 -5
Burkina Faso 1999 70.03 868.089 74.646 0.642 9.12025 0.683527 -4
Burkina Faso 2002 56.54 962.592 80.222 3.935 9.98406 0.509061 0
Burkina Faso 2005 55.04 1,097.46 87.06 4.472 13.35987 0.317423 0
Burkina Faso 2008 45.06 1,278.95 100.864 11.582 17.74582 0.2233 0
Burundi 1981 85.24 242.072 13.433 10.986 2.83161 0.442893 -7
Burundi 1984 88.31 261.097 19.085 24.966 2.99239 0.971135 -7
Burundi 1987 87.03 315.92 19.766 4.985 3.83622 1.610714 -7
Burundi 1990 84.49 355.682 25.829 10.732 4.80301 1.259117 -7
Burundi 1993 84.24 365.316 33.467 15.532 6.56348 1.398228 0
Burundi 1996 85.91 299.52 62.001 37.384 1.123929 -5
Burundi 1999 86.43 314.828 93.823 20.71 0.99765 -1
Burundi 2002 85.9 317.899 115.177 3.529 1.1061 2
Burundi 2005 81.32 335.097 143.853 0.957 13.79438 1.576789 6
Burundi 2008 80.58 390.241 226.707 25.664 18.21889 0.701623 6
* PopBPL: Percentage of Population Living Below the Poverty Line, CPI: Consumer Price Index, GDPPC:
GDP PerCapita, SecSchEnr: Secondary School Enrollment Ratio, IntPmt: Interest Payment as fraction of
GDP.
56
Data Series* (Low Income Countries), continued

Cambodia 1981 86.1
Cambodia 1984 80.88
Cambodia 1987 71.96 482.992 1.04 n/a 0.001577
Cambodia 1990 77.33 562.453 6.461 151 2.694868 1
Cambodia 1993 48.55 666.123 48.281 41 1
Cambodia 1996 42.72 676.185 67.728 10.034 0.11425 1
Cambodia 1999 44.58 830.413 83.346 -0.543 15.58153 0.414071 2
Combodia 2002 50.31 1,052.19 83.499 1.427 22.66118 0.194535 2
Cambodia 2005 40.19 1,456.70 95.248 8.411 0.244034 2
Cambodia 2008 22.75 2,033.84 127.256 12.52 44.32628 0.230641 2
1
CAF 1981 79.91 514.666 49.285 14.66 13.41525 0.633999 -7
1
CAF 1984 79.45 545.366 65.603 2.604 15.2655 1.395028 -7
1
CAF 1987 80.24 578.089 69.025 -6.986 12.6883 1.06908 -7
1
CAF 1990 81.2 605.633 66.032 -1.057 11.43235 0.802144 -7
1
CAF 1993 83.15 573.378 62.403 -4.769 0.463234 5
1
CAF 1996 66.81 558.804 99.236 4.608 0.46778 5
1
CAF 1999 59.31 633.894 92.55 -4.212 0.627408 5
1
CAF 2002 62.43 650.135 111.855 9.085 11.93463 0.060293 5
1
CAF 2005 64.43 657.923 112.524 2.204 0.066318 -1
1
CAF 2008 62.83 739.113 137.749 14.525 12.6721 0.337847 -1
Chad 1981 61.09 381.508 32.73 8.11 0.074986 0
Chad 1984 51.83 520.031 46.798 20.3 0.090322 -4
Chad 1987 60.09 620.102 39.373 -4.7 5.5136 0.3242 -7
Chad 1990 55.9 726.398 44.537 3.413 6.4769 0.292891 -7
Chad 1993 67.11 811.355 55.688 31.4 0.387634 -4
Chad 1996 67.05 826.297 78.038 10.5 8.23638 0.728581 -2
Chad 1999 60.16 898.124 83.952 3.3 10.09491 0.68671 -2
Chad 2002 61.94 1,062.33 107.571 12.556 13.62602 0.542963 -2
Chad 2005 58.67 1,648.44 100 -3.428 16.24977 0.390701 -2
Chad 2008 44.86 1,695.22 110.5 9.671 22.39543 0.277088 -2
Comoros 1981 53.28 636.613 26.56527 0.629517 -5
Comoros 1984 51.83 768.864 1.682554 -6
Comoros 1987 52.84 801.568 34.30127 0.707065 -7
Comoros 1990 51.44 851.809 0.347334 4
Comoros 1993 55.21 956.039 0.244172 4
Comoros 1996 52.81 907.751 97.091 -- 0.278956 4
Comoros 1999 52.35 982.631 101.424 -1.287 29.79911 0.412511 -2
Comoros 2002 49.7 1,046.53 113.596 -0.935 35.28872 0.370197 4
Comoros 2005 46.11 1,130.59 131.596 7.196 46.34076 0.368445 6
Comoros 2008 47.72 1,184.92 146.943 7.4 0.796473 9
2
CDR 1981 31.87 369.559 52.174 23.84379 1.564562 -9
2
CDR 1984 32.99 406.073 159.083 23.26126 3.240886 -9
2
CDR 1987 32.19 431.187 106.47 22.80944 2.8105 -9
2
CDR 1990 80.21 404.181 264.97 1.718289 -8
2
CDR 1993 62.33 281.795 4,583.08 22.65985 0.229229 0
2
CDR 1996 65.69 261.775 1 1,705.11 0.2216 0
2
CDR 1999 72.37 229.153 16.4 485.714 19.01993 0.453643 0
2
CDR 2002 65.99 217.88 272.12 15.751 22.57164 5.521614 0
2
CDR 2005 59.22 261.694 376.436 21.272 1.509215 4
2
CDR 2008 86.15 309.691 624.164 27.572 35.98298 2.755849 5
1 2
GDP. CAF: Central African Republic, CDR: Congo, Democratic Republic of.
57

Cte d'Ivoire 1981 6.66 1,257.39 36.944 7.78 19.01242 10.46207
Cte d'Ivoire 1984 9.65 1,227.79 44.056 4.068 18.51973 12.44442
Cte d'Ivoire 1987 8.68 1,281.75 53.556 7.469 17.98529 6.433856
Cte d'Ivoire 1990 17.34 1,346.08 55.889 0.1 6.955311
Cte d'Ivoire 1993 17.79 1,384.25 60.344 2.52 5.262521
Cte d'Ivoire 1996 23.65 1,542.69 88.925 3.5 4.586444
Cte d'Ivoire 1999 24.06 1,677.70 97.915 0.744 22.9796 5.259122
Cte d'Ivoire 2002 23.34 1,580.28 109.826 4.399 27.14373 2.855393
Cte d'Ivoire 2005 20.38 1,580.16 117.48 2.531 0.321738
Cte d'Ivoire 2008 23.75 1,644.14 132.509 8.954 0.983938
Ethiopia 1981 66.22 314.793 34.015 5.43 0.420268 -7
Ethiopia 1984 65.59 349.656 38.963 9.05 11.53572 0.579885 -8
Ethiopia 1987 63.53 380.666 39.462 -4.66 13.5458 0.663148 -8
Ethiopia 1990 65.88 395.1 49.177 5.005 0.489766 -8
Ethiopia 1993 60.72 370.51 76.199 4.714 10.92641 0.339776 1
Ethiopia 1996 56.74 445.348 84.641 -8.999 11.32758 0.654645 1
Ethiopia 1999 55.58 450.938 99.73 12.259 13.3356 0.737896 1
Ethiopia 2002 47.85 511.374 87.669 -1.016 19.52273 0.476989 1
Ethiopia 2005 39.04 632.685 124.482 12.99 24.97055 0.43671 1
Ethiopia 2008 15.98 881.054 248.241 55.27 33.3462 0.149129 1
Gambia, The 1981 64.32 9,488.91 47.178 9.897 14.43973 2.922704 7
Gambia, The 1984 76.18 11,687.48 59.16 6.132 18.98734 3.87962 7
Gambia, The 1987 73.6 13,770.52 66.498 3.622 18.40402 3.620648 7
Gambia, The 1990 67.87 16,855.39 77.008 2.067 18.57427 4.203452 8
Gambia, The 1993 63.72 16,174.79 85.041 2.96 21.99087 1.992378 8
Gambia, The 1996 68.41 18,967.87 87.49 1.731 24.16925 1.48587 -6
Gambia, The 1999 34.39 22,781.97 91.59 2.244 1.588751 -5
Gambia, The 2002 34.34 26,355.33 98.05 1.722 1.694718 -5
Gambia, The 2005 31.3 30,459.16 100.41 1.057 2.484411 -5
Gambia, The 2008 32.12 36,244.53 107.12 3.388 54.06815 0.872274 -5
Ghana 1981 48.85 7,777.12 n/a n/a 39.61545 1.621296 -7
Ghana 1984 53.15 9,286.88 n/a n/a 38.54161 1.548744 -7
Ghana 1987 50.97 8,260.93 n/a n/a 36.76198 2.366633 -7
Ghana 1990 50.68 10,838.09 74.094 15.369 35.16343 1.809582 -7
Ghana 1993 49.74 11,513.23 63.516 1.317 1.932055 -1
Ghana 1996 43.97 12,811.72 97.351 0.822 1.976458 2
Ghana 1999 39.12 12,378.00 99.006 -0.949 40.1816 1.997863 2
Ghana 2002 34.96 12,195.71 102.154 0.421 40.6379 1.495257 6
Ghana 2005 29.99 13,081.16 106.41 1.115 47.20623 0.904745 8
Ghana 2008 24.64 14,559.22 118.177 5.576 56.26766 0.512849 8
Guinea 1981 88 16.70584 -9
Guinea 1984 89.15 15.44759 -7
Guinea 1987 93.89 43.962 33.654 11.97187 2.543996 -7
Guinea 1990 94.07 645.4 89.1 27.331 10.38552 2.334576 -7
Guinea 1993 56.06 680.172 121.9 4.996 12.39718 1.246494 -5
Guinea 1996 43.89 747.458 134.2 2.053 13.58341 1.244519 -1
Guinea 1999 54 839.976 156.8 6.161 13.78233 1.651082 -1
Guinea 2002 70.13 936.658 180.4 6.118 21.38813 1.102367 -1
Guinea 2005 69.83 952.001 334.685 29.663 30.69876 1.777481 -1
Guinea 2008 42.29 1,060.92 596.303 13.504 36.7243 1.118768 -1
GDP.
58

CPI- SecSch
Country Year PopBPL GDPPC CPI IntPmt Polity
Inflation Enr
Guinea-Bissau 1981 31.15 628.342 0.116 27.04 6.48906 1.419526 -7
Guinea-Bissau 1984 25.62 717.446 0.397 94.642 11.66838 3.764561 -8
Guinea-Bissau 1987 37.33 796.469 1.93 76.887 6.39152 4.077047 -8
Guinea-Bissau 1990 41.32 915.578 6.396 32.138 2.608845 -8
Guinea-Bissau 1993 52.11 1,011.96 24.986 30.7 1.009564 -6
Guinea-Bissau 1996 46.38 1,139.85 73.889 65.621 1.756022 5
Guinea-Bissau 1999 56.45 935.639 85.701 -7.9 2.392143 3
Guinea-Bissau 2002 48.83 922.407 100.584 2.519 0.521877 5
Guinea-Bissau 2005 42.46 944.249 103.169 -1.026 33.8009 0.379583 6
Guinea-Bissau 2008 47.97 1,042.74 126.462 8.68 0.425417 6
Haiti 1981 54.57 903.508 5.005 n/a 12.74015 -9
Haiti 1984 59.47 940.331 6.155 5.428 17.05097 -9
Haiti 1987 59.95 971.452 6.142 -4.133 -8
Haiti 1990 56.82 1,017.36 9.328 26.115 7
Haiti 1993 59.11 978.711 15.606 27.681 -7
Haiti 1996 60.51 988.663 30.645 17.015 27.68513 7
Haiti 1999 57.96 1,054.23 42.652 9.921 2
Haiti 2002 54.9 1,059.86 61.077 11.373 -2
Haiti 2005 57.95 1,072.19 117.6 14.844 0.449683 3
Haiti 2008 63.58 1,180.89 170.889 19.838 0.366509 5
India 1981 60.16088 477.358 20.441 12.745 30.59424 0.415046 8
India 1984 55.4928 592.786 26.128 5.188 35.59588 0.843842 8
India 1987 53.575 690.244 33.416 9.302 37.34146 0.984931 8
India 1990 50.773 883.042 43 13.158 1.530945 8
India 1993 48.953 1,006.77 57 7.547 45.5184 1.531723 8
India 1996 46.81367 1,236.84 76 10.145 46.03737 1.139924 9
India 1999 40.647 1,445.48 93 0 43.44509 0.845856 9
India 2002 40.96317 1,673.36 105 3.96 47.34214 0.837892 9
India 2005 41.529 2,190.27 119 5.31 53.856 0.544522 9
India 2008 37.37 2,916.29 147 9.701 60.1621 0.603244 9
Kenya 1981 38.42 713.355 6.714 n/a 29.28377 3.630738 -6
Kenya 1984 38.56 796.226 9.953 10.284 31.93531 3.861948 -7
Kenya 1987 36.71 914.73 14.018 13.007 41.11624 3.7883 -7
Kenya 1990 35.35 1,065.97 22.354 41.381 4.053092 -7
Kenya 1993 38.42 1,061.60 52.914 54.7 4.917768 -5
Kenya 1996 21.12 1,168.54 66.729 10.664 2.313515 -5
Kenya 1999 24.12 1,211.78 83.132 10.503 38.44118 1.363927 -2
Kenya 2002 34.57 1,268.53 98.424 4.25 40.80617 0.888486 8
Kenya 2005 43.37 1,398.70 130.725 4.7 47.69848 0.487942 8
Kenya 2008 40.58 1,604.93 171.076 15.478 59.12225 0.375999 7
Kyrgyz Republic 1981 0 109.95881
Kyrgyz Republic 1984 0
Kyrgyz Republic 1987 0
Kyrgyz Republic 1990 4.79 102.53398
Kyrgyz Republic 1993 18.61 1,299.01 17.737 929.867 94.51779 0.069811 -3
Kyrgyz Republic 1996 31.13 1,079.39 51.218 34.833 76.71312 2.124995 -3
Kyrgyz Republic 1999 15.5 1,254.11 94.574 39.864 83.32765 4.418751 -3
Kyrgyz Republic 2002 34.03 1,436.50 109.923 2.302 84.51412 1.911248 -3
Kyrgyz Republic 2005 21.81 1,712.52 125.112 4.92 86.87448 1.463227 3
Kyrgyz Republic 2008 2,171.78 189.522 20.06 85.5665 1.033857 3
GDP.
59

Lao PDR 1981 88.01 423.316 n/a n/a 19.66684 -7
Lao PDR 1984 82.43 515.955 n/a n/a 20.81374 0.071081 -7
Lao PDR 1987 76.6 582.939 3.567 n/a 0.176497 -7
Lao PDR 1990 65.91 685.287 9.305 29.188 23.72418 0.338856 -7
Lao PDR 1993 55.68 806.06 12.008 10.315 22.52508 0.35692 -7
Lao PDR 1996 44.52 980.776 18.425 12.76 25.23144 0.350303 -7
Lao PDR 1999 46.63 1,108.79 90.449 86.656 32.75423 0.649187 -7
Lao PDR 2002 43.96 1,323.12 123.878 15.211 39.62774 2.061214 -7
Lao PDR 2005 35.68 1,647.39 164.866 8.791 44.6944 1.799306 -7
Lao PDR 2008 33.88 2,140.66 188.048 3.167 44.65939 1.155087 -7
Liberia 1981 75.06 3.787445 -7
Liberia 1984 80.07 3.998685 -6
Liberia 1987 82.76 1.360517 -6
Liberia 1990 83.19 0
Liberia 1993 88.32 0
Liberia 1996 87.31 0
Liberia 1999 87.72 95 31.10409 0.597787 0
Liberia 2002 88.7 396.263 133.968 11.095 0.136926 0
Liberia 2005 86.07 319.763 161.895 7 0.208773 5
Liberia 2008 83.06 383.057 221.293 9.388 81.00212 6
Madagascar 1981 85.89 587.729 5.659 30.457 1.809149 -6
Madagascar 1984 82.5 598.238 9.789 9.759 34.68254 2.224323 -6
Madagascar 1987 78.88 621.399 15.632 29.196 4.912228 -6
Madagascar 1990 68.37 705.78 23.091 13.843 18.62441 3.452641 -6
Madagascar 1993 72.49 677.755 32.417 8.256 0.929547 9
Madagascar 1996 74.92 683.423 77.705 8.282 0.587012 9
Madagascar 1999 82.32 736.163 95.443 10.105 2.259834 7
Madagascar 2002 76.34 694.804 125.1 13.882 0.770943 7
Madagascar 2005 67.83 833.419 176.093 11.451 21.76684 0.614202 7
Madagascar 2008 71.62 997.537 232.5 10.085 29.74828 0.133111 7
Malawi 1981 85.28 321.299 1.455 8.998 15.95827 5.866773 -9
Malawi 1984 86.09 377.257 2.174 11.926 17.24287 3.927193 -9
Malawi 1987 91.71 369.345 3.725 35.511 17.03664 3.86161 -9
Malawi 1990 90.48 391.988 5.742 23.2 16.51822 2.539414 -9
Malawi 1993 86.15 450.408 9.928 18.309 17.54737 1.420062 -8
Malawi 1996 83.4 516.658 30.759 6.7 23.39917 1.465946 6
Malawi 1999 80.78 555.894 69.562 28.231 38.16432 1.140073 6
Malawi 2002 75.71 532.719 147.6 28.28 31.57353 0.660862 4
Malawi 2005 73.86 605.55 214.822 16.561 27.94402 0.863429 6
Malawi 2008 67.34 732.132 279.7 9.945 31.21711 0.374908 6
Mali 1981 81.52 382.715 8.01425 0.825116 -7
Mali 1984 81.21 409.419 7.15071 1.232138 -7
Mali 1987 86.23 440.977 5.85082 1.286423 -7
Mali 1990 85.19 537.191 72.139 n/a 6.66727 0.99924 -7
Mali 1993 86.08 583.578 66.069 0.429 8.47814 1.63469 7
Mali 1996 78.91 645.315 97.871 2.782 11.67676 2.419772 7
Mali 1999 69.72 726.827 100.501 -1.277 14.34212 1.196757 6
Mali 2002 57.72 813.493 112.8 4.078 0.782237 7
Mali 2005 51.43 1,018.61 112.45 3.361 24.47858 0.598332 7
Mali 2008 50.96 1,187.04 128.387 7.439 32.32035 0.292483 7
GDP.
60
Data Series*(Low Income Countries), continued

Mauritania 1981 38.9 831.32 n/a n/a 10.35266 4.515284 -7
Mauritania 1984 41.83 927 n/a n/a 5.252496 -7
Mauritania 1987 41.32 1,036.58 34.446 4.093 14.99184 4.35064 -7
Mauritania 1990 45.92 1,138.97 41.014 -0.423 13.55543 4.403417 -7
Mauritania 1993 42.79 1,265.80 50.701 1.493 14.40179 3.933759 -6
Mauritania 1996 23.4 1,406.36 59.298 4.479 16.01432 2.363274 -6
Mauritania 1999 21.75 1,434.56 69.047 1.927 18.10662 2.954303 -6
Mauritania 2002 17.87 1,501.22 80.392 8.402 20.76279 1.413537 -6
Mauritania 2005 13.37 1,767.39 101.16 5.805 22.71328 1.196819 -5
Mauritania 2008 23.43 2,082.97 122.892 3.9 22.29379 0.705866 -5
Mongolia 1981 62.41 91.63208 -7
Mongolia 1984 52.69 -7
Mongolia 1987 45.09 -7
Mongolia 1990 34.91 1,743.55 0.348 n/a 87.09979 2
Mongolia 1993 24.13 1,430.08 12.791 183 65.90698 1.446449 9
Mongolia 1996 18.79 1,627.18 47.084 44.576 63.95632 0.660077 10
Mongolia 1999 30.82 1,814.73 66.136 9.966 61.12536 1.035925 10
Mongolia 2002 15.47 2,016.33 79.081 1.72 75.44544 0.896444 10
Mongolia 2005 22.38 2,614.99 100 9.228 89.3958 0.817941 10
Mongolia 2008 3,879.53 147.264 23.192 0.639599 10
Mozambique 1981 60.75 220.426 0.286 9.521 5.11275 -8
Mozambique 1984 76.52 172.5 0.593 29.79 0.1473 -8
Mozambique 1987 77.02 203.808 3.203 185.325 5.39326 1.170783 -7
Mozambique 1990 84.03 258.574 9.152 47.099 6.92226 1.624729 -7
Mozambique 1993 80.64 290.17 27.463 43.638 6.68237 4.242267 -6
Mozambique 1996 81.34 354.98 80.323 19.343 1.615788 5
Mozambique 1999 64.25 468.194 89.736 6.216 5.18658 1.144216 5
Mozambique 2002 74.69 580.583 133.054 9.119 8.44146 0.644121 5
Mozambique 2005 68.23 711.282 183.579 11.148 13.24601 0.385581 5
Mozambique 2008 59.58 906.534 235.082 6.181 20.51937 0.250821 5
Nepal 1981 80.3928 307.394 13.945 10.9 18.01258 0.368295 -2
Nepal 1984 78.1509 362.607 18.043 1.565 24.17775 0.309401 -2
Nepal 1987 80.62 414.056 25.618 9.14 28.36248 0.565063 -2
Nepal 1990 77.03 505.457 32.482 5.561 31.9152 0.764127 5
Nepal 1993 73.81 583.91 47.232 5.861 37.9385 0.753914 5
Nepal 1996 68.44 678.506 59.358 5.993 43.50475 0.69069 5
Nepal 1999 61.82 746.598 76.595 9.017 33.68521 0.644655 6
Nepal 2002 55.12 832.551 82.473 3.51 41.78074 0.466381 -6
Nepal 2005 54.7 969.134 95.201 6.65 46.09262 0.393078 -6
Nepal 2008 33.9 1,159.25 119.5 10.695 0.277761 6
Niger 1981 57.44 487.091 49.3 23.645 4.58141 4.253358 -7
Niger 1984 80.62 411.333 52.611 0.527 4.78432 3.303015 -7
Niger 1987 67.28 464.251 47.966 0.192 5.02832 3.684248 -7
Niger 1990 65.04 501.918 45.299 -2.572 6.04684 1.483628 -7
Niger 1993 72.79 478.289 42.494 3.471 6.30742 1.527836 8
Niger 1996 79.41 467.877 66.642 3.634 6.3529 0.609767 -6
Niger 1999 76.02 506.097 70.372 -1.87 7.08235 0.567022 5
Niger 2002 80.01 543.548 76.451 0.56 6.83847 0.400116 5
Niger 2005 65.88 624.172 81.338 4.158 9.82571 0.396602 6
Niger 2008 43.62 739.635 93.499 9.417 11.11397 0.208001 6
GDP.
61

Pop CPI- SecSch
Country Year GDPPC CPI IntPmt Polity
BPL Inflation Enr
Nigeria 1981 47.24 892.119 0.543 17.312 16.82785 1.978975 7
Nigeria 1984 53.93 866.962 1.018 25 28.33147 7.071055 -7
Nigeria 1987 54.1 761.414 1.289 11.765 26.87658 3.076079 -7
Nigeria 1990 49.07 1,005.05 2.647 2.632 24.31295 8.424633 -5
Nigeria 1993 49.19 1,021.54 7.838 61.538 4.798367 -7
Nigeria 1996 68.51 1,056.43 23.966 14.314 3.299027 -6
Nigeria 1999 69.27 1,078.88 29.627 0.224 23.25023 1.376761 4
Nigeria 2002 62.75 1,457.40 44.338 12.169 29.16394 0.647851 4
Nigeria 2005 62.39 1,795.50 67.373 11.565 34.43702 5.056942 4
Nigeria 2008 66.46 2,164.04 89.7 15.148 35.09154 0.121051 4
Pakistan 1981 72.9 646.774 26.532 10.432 16.35899 1.257005 -7
Pakistan 1984 68.25 812.556 30.991 3.409 17.41709 1.629072 -7
Pakistan 1987 66.46 982.206 35.658 4.681 18.38981 1.824721 -4
Pakistan 1990 58.47 1,193.04 47.427 13.81 20.14668 1.991811 8
Pakistan 1993 23.87 1,386.22 66.999 9.626 1.665097 8
Pakistan 1996 48.14 1,598.43 92.577 10.297 1.889667 8
Pakistan 1999 29.56 1,706.86 114.931 3.681 1.677119 -6
Pakistan 2002 13.95 1,868.41 128.039 3.388 1.152417 -5
Pakistan 2005 22.59 2,231.04 153.903 8.736 29.48321 0.658747 -5
Pakistan 2008 21.04 2,690.20 215.433 21.531 33.51434 0.643708 5
Papua New Guinea 1981 29.46 937.418 n/a n/a 10.2638 4.03016 4
Papua New Guinea 1984 32.88 1,036.30 74.099 4.39 10.80948 6.585404 4
Papua New Guinea 1987 32.54 1,225.12 83.836 2.99 11.50727 5.423134 4
Papua New Guinea 1990 43 1,198.03 100 8.908 11.27538 5.222733 4
Papua New Guinea 1993 42.56 1,676.65 116.284 4.813 12.94723 3.704386 4
Papua New Guinea 1996 35.82 1,794.98 154.81 5.282 2.136366 4
Papua New Guinea 1999 27.12 1,734.95 224.846 13.197 1.999921 4
Papua New Guinea 2002 29.35 1,703.20 313.283 14.815 2.474876 4
Papua New Guinea 2005 29.7 1,770.91 364.21 4.72 1.401251 4
Papua New Guinea 2008 42.47 2,096.55 414.342 11.244 0.524228 4
Rwanda 1981 66.52 399.267 7.644 3.108 11.40859 0.445806 -7
Rwanda 1984 63.33 484.075 9.761 5.924 14.13115 0.388933 -7
Rwanda 1987 69.88 520.412 10.086 2.895 16.35798 0.441849 -7
Rwanda 1990 70.46 502.858 11.02 6.048 17.37766 0.430515 -7
Rwanda 1993 69.12 468.408 17.235 12.51 0.532424 -7
Rwanda 1996 74.14 495.762 42.635 8.736 0.539467 -6
Rwanda 1999 75.42 590.141 47.718 2.057 10.02174 0.603922 -6
Rwanda 2002 74.75 673.413 53.497 6.165 11.72521 0.434817 -4
Rwanda 2005 74.43 855.685 67.061 5.608 15.86902 0.422599 -3
Rwanda 2008 67.66 1,122.02 98.041 22.323 22.16224 0.120905 -3
Senegal 1981 68.26 761.574 34.174 11.285 11.31379 3.091063 -1
Senegal 1984 66.6 847.356 48.835 9.701 11.88269 3.860227 -1
Senegal 1987 64.44 948.076 53.846 -5.164 13.3017 3.333174 -1
Senegal 1990 65.81 992.761 52.67 -0.909 14.97217 2.316038 -1
Senegal 1993 58.77 1,042.51 52.292 0.498 0.756627 -1
Senegal 1996 52.85 1,100.98 77.73 2.433 14.85307 2.608636 -1
Senegal 1999 47.95 1,238.15 80.331 0.484 15.87991 1.522123 -1
Senegal 2002 41.99 1,327.31 85.969 1.484 18.0933 1.409551 8
Senegal 2005 33.5 1,565.48 87.362 1.422 23.48565 0.670499 8
Senegal 2008 25.19 1,757.20 100.493 4.261 31.40293 0.416561 7
GDP.
62

Sierra Leone 1981 59.39 637.484 0.234 25.37 14.60327 1.98431 -7
Sierra Leone 1984 61.3 707.238 0.943 52.279 18.37014 1.519166 -7
Sierra Leone 1987 62.56 687.65 7.723 116.797 1.170672 -7
Sierra Leone 1990 63.11 780.13 39.303 98.286 16.47353 1.5794 -7
Sierra Leone 1993 65.16 653.97 144.561 26.69 2.426817 -7
Sierra Leone 1996 55.63 485.019 243.56 6.379 1.637836 4
Sierra Leone 1999 56.74 351.058 524.387 36.745 1.659592 0
Sierra Leone 2002 53.37 528.793 509.633 -3.08 0.711401 5
Sierra Leone 2005 49.92 639.904 733.76 13.1 0.879849 5
Sierra Leone 2008 44.74 769.137 1,014.39 12.246 0.171899 7
Tajikistan 1981 0
Tajikistan 1984 0.23
Tajikistan 1987 0.48
Tajikistan 1990 0
Tajikistan 1993 19.6 1,104.05 1.19 7,344.00 92.99691 0.051759 -6
Tajikistan 1996 65.85 749.564 37.942 40.546 0.113374 -6
Tajikistan 1999 43.99 813.733 133.689 30.142 74.60913 2.434796 -1
Tajikistan 2002 36.25 1,059.20 276.494 14.471 78.95515 1.443076 -1
Tajikistan 2005 21.49 1,397.97 356.172 7.125 82.45655 0.59339 -3
Tajikistan 2008 1,773.03 537.22 11.857 85.812 0.606783 -3
Tanzania 1981 65.43 414.732 1.476 26.29 3.05671 -6
Tanzania 1984 63.6 430.428 3.124 27.564 3.0573 -6
Tanzania 1987 66.32 493.534 7.395 32.303 3.86352 -6
Tanzania 1990 70.34 590.038 15.7 18.624 5.04196 1.510452 -6
Tanzania 1993 76.12 605.429 32.93 26.108 5.30322 2.616864 -5
Tanzania 1996 81.67 648.205 66.551 15.546 5.16868 1.58806 -1
Tanzania 1999 86.61 705.837 91.36 6.962 6.11549 0.917312 -1
Tanzania 2002 86.54 824.678 103.712 4.404 7.36294 0.39382 -1
Tanzania 2005 82.4 1,008.92 118.517 4.982 10.97348 0.385994 -1
Tanzania 2008 66.76 1,269.73 146.412 9.281 25.16022 0.204214 -1
Timor-Leste* 1981 82.06 n/a n/a n/a
Timor-Leste* 1999 55.88 1,802.60 97.12 n/a
Timor-Leste* 2002 52.94 1,922.23 112.354 5.964 39.248
Timor-Leste* 2005 43.56 2,133.99 117.76 0.994 54.95435
Timor-Leste 2008 34.7 2,459.04 143.534 6.139 49.51558
Togo 1981 35.2 627.312 36.015 10.966 4.137325 -7
Togo 1984 33.17 553.15 40.609 -3.132 21.25665 6.890104 -7
Togo 1987 37.49 561.399 42.847 -0.498 18.05023 3.358918 -7
Togo 1990 33.75 691.163 42.499 1.534 20.78265 2.693894 -7
Togo 1993 47.78 563.508 44.725 2.351 1.031148 -2
Togo 1996 27.84 717.779 74.128 4.906 23.03614 1.828951 -2
Togo 1999 26.4 700.817 78.706 4.525 31.20353 0.829051 -2
Togo 2002 32.96 655.927 83.278 1.552 40.62018 0.240859 -2
Togo 2005 38.68 755.292 89.694 5.471 46.80196 0.087222 -4
Togo 2008 38.52 829.127 103.776 10.27 1.925577 -4
GDP.
63

Uganda 1981 66.24 302.492 0.089 n/a 5.45778 1.352102 3
Uganda 1984 66.84 347.407 0.537 20 1.389994 3
Uganda 1987 72.05 345.082 11.269 240.541 0.694799 -7
Uganda 1990 68.65 423.188 75.572 26.877 11.1803 0.849269 -7
Uganda 1993 70.01 468.586 162.389 -2.358 1.103407 -4
Uganda 1996 64.39 584.493 205.45 5.433 0.717246 -4
Uganda 1999 60.49 659.655 236.759 5.3 0.569031 -4
Uganda 2002 57.37 768.333 249.104 -2.5 19.20214 0.415575 -4
Uganda 2005 51.53 901.194 306.646 10.74 19.17172 0.395254 -1
Uganda 2008 44.41 1,158.24 386.087 12.5 26.26794 0.152842 -1
Uzbekistan 1981 105.45797
Uzbekistan 1984
Uzbekistan 1987
Uzbekistan 1990 4.93 101.48477
Uzbekistan 1993 16.06 1,255.61 4.101 884.782 94.31026 0.101132 -9
Uzbekistan 1996 11.06 1,203.87 201.978 64.374 0.775496 -9
Uzbekistan 1999 35.84 1,353.86 481.873 25.97 86.31654 1.215496 -9
Uzbekistan 2002 42.33 1,557.24 949.668 21.557 90.69453 1.895954 -9
Uzbekistan 2005 38.81 1,952.03 1,254.42 12.335 101.04401 1.014506 -9
Uzbekistan 2008 2,606.52 1,790.41 14.449 101.9511 0.542141 -9
Vietnam 1981 90.36 339.461 n/a n/a -7
Vietnam 1984 84.42 460.574 n/a n/a -7
Vietnam 1987 81.63 525.261 4.186 -34.571 -7
Vietnam 1990 34.21 657.7 34.359 66.253 35.4968 1.157527 -7
Vietnam 1993 63.74 839.612 71.295 5.28 0.850422 -7
Vietnam 1996 59.01 1,106.71 92.381 9.208 0.798134 -7
Vietnam 1999 49.09 1,322.89 100.637 -0.307 60.75352 1.280566 -7
Vietnam 2002 40.05 1,649.28 105.082 4.119 69.21064 0.872817 -7
Vietnam 2005 22.74 2,142.72 129.452 8.819 77.09219 0.836905 -7
Vietnam 2008 16.85 2,799.90 186.516 19.891 77.206 0.648254 -7
Yemen, Rep. 1981 10.06 n/a n/a n/a
Yemen, Rep. 1990 5.19 1,406.44 n/a n/a 1.844783 -5
Yemen, Rep. 1993 10.06 1,579.36 n/a n/a 0.923448 -2
Yemen, Rep. 1996 13.15 1,747.99 69.85 27.226 0.559946 -2
Yemen, Rep. 1999 14.15 1,919.41 92.201 10.184 39.95262 1.132896 -2
Yemen, Rep. 2002 9.74 2,126.03 127.647 4.33 0.676123 -2
Yemen, Rep. 2005 17.53 2,203.05 179.368 12.478 46.04035 0.412098 -2
Yemen, Rep. 2008 17.13 2,412.94 238.294 10.795 43.27709 0.31687 -2
Zambia 1981 52 920.824 0.038 13.997 16.23158 3.265462 -9
Zambia 1984 59.23 905.924 0.061 20.019 4.549027 -9
Zambia 1987 50.84 938.49 0.19 47.028 19.59077 3.859597 -9
Zambia 1990 61.05 999.933 1.31 96.008 21.29864 2.53579 -9
Zambia 1993 65.27 1,004.79 16.752 128.105 5.022913 6
Zambia 1996 62.07 865.268 45.748 35.21 3.090759 1
Zambia 1999 57.93 867.562 85.444 20.633 3.036768 1
Zambia 2002 64.6 976.706 167.09 26.654 1.732606 5
Zambia 2005 64.29 1,130.41 266.49 15.851 1.00239 5
Zambia 2008 66.27 1,360.61 366.246 16.56 0.394853 7
GDP.
64

CPI- SecSch
Polity
Country Year PopBPL GDPPC CPI Inflation Enr IntPmt
Albania 1981 0.17 2,093.00 92.646 -9
Albania 1984 0.16 2,389.82 83.234 -9
Albania 1987 0.1 2,516.24 88.238 -9
Albania 1990 0.85 2,630.11 100 89.099 1
Albania 1993 0.86 2,155.22 899.281 30.941 0.249903 5
Albania 1996 0.2 3,006.83 1,296.31 17.405 74.983 0.250144 0
Albania 1999 0.42 3,456.95 1,981.12 -1.029 72.543 0.24775 5
Albania 2002 0.57 4,453.30 2,173.16 1.681 0.51545 7
Albania 2005 0.85 5,352.51 2,341.06 2.038 0.348443 9
Albania 2008 6,901.01 2,526.72 2.162 84.645 0.519269 9
Algeria 1981 3.5 2,771.71 44.463 6.632 33.207 4.095137 -9
Algeria 1984 2.82 3,414.17 58.362 10.662 42.703 2.90433 -9
Algeria 1987 7.56 3,503.56 75.763 3.168 53.451 2.504293 -9
Algeria 1990 7.07 3,802.31 134.3 47.373 62.016 3.376911 -2
Algeria 1993 6.23 3,766.43 250.474 16.1 59.830 3.703434 -7
Algeria 1996 6.79 4,023.54 486.334 15.1 60.156 4.753603 -3
Algeria 1999 8.23 4,392.42 542.113 1.212 3.905075 -3
Algeria 2002 5.41 4,894.62 574.77 -1.5 74.890 2.222223 -3
Algeria 2005 4.26 6,059.89 619.477 1.66 83.380 0.947324 2
Algeria 2008 2.73 6,759.61 706.933 4.863 0.112618 2
Angola 1981 63.6 1,724.83 84.919 1.833 16.621 -7
Angola 1984 48.37 2,016.49 89.674 1.833 13.502 -7
Angola 1987 46.62 2,037.72 94.697 1.833 12.543 -7
Angola 1990 47.31 2,149.43 100 1.833 10.915 1.744555 -7
Angola 1993 63.25 1,549.55 31,833.84 1,837.87 2.829932 -1
Angola 1996 58 2,102.24 232,048,153 1,650.83 5.80771 -2
Angola 1999 54.31 2,194.64 5,834,898,764 329.001 12.958 3.355795 -3
Angola 2002 50.51 2,599.98 95,474,453,290 105.59 18.124 1.619275 -2
Angola 2005 42.53 3,328.61 261,995,833,302 18.53 1.177701 -2
Angola 2008 55.9 5,614.74 371,871,687,882 13.17 25.538 0.725596 -2
Armenia 1981 0.87
Armenia 1984 0.95
Armenia 1987 1.06
Armenia 1990 6.34
Armenia 1993 24.29 1,036.91 4.337 10,896.20 0.127791 7
Armenia 1996 17.5 1,354.41 120.141 5.809 90.326 0.601219 -6
Armenia 1999 18.03 1,730.52 147.481 2.048 91.582 1.039506 5
Armenia 2002 14.97 2,523.12 155.275 1.959 84.716 1.190415 5
Armenia 2005 4.74 3,903.50 171.692 -0.182 87.857 0.690807 5
Armenia 2008 5,806.62 203.221 5.307 88.393 0.70392 5
Azerbaijan 1981 14.25 94.526
Azerbaijan 1984 15.06
Azerbaijan 1987 15.96
Azerbaijan 1990 16.8 88.768
Azerbaijan 1993 17.35 2,325.82 2.863 1,350.00 86.762 -3
Azerbaijan 1996 18.64 1,706.71 106.677 6.677 73.262 0.316065 -6
Azerbaijan 1999 13.85 2,219.33 98.499 -0.467 78.452 0.612547 -7
Azerbaijan 2002 3.15 2,774.00 105.436 3.342 80.088 0.406849 -7
Azerbaijan 2005 0.03 4,455.83 127.271 5.549 84.260 0.303959 -7
Azerbaijan 2008 8,724.71 195.546 15.4 0.296941 -7
GDP.
65

Pop CPI- SecSch Pol
Country Year BPL GDPPC CPI Inflation Enr IntPmt ity
Belarus 1981 0.09 97.393
Belarus 1984 0.08 97.410
Belarus 1987 0.08 99.788
Belarus 1990 0.07 97.590
Belarus 1993 0.02 4,118.02 86,095.90 1,996.63 90.714 0.0730048 7
Belarus 1996 2 3,554.52 8,496,625.90 39.299 94.397 0.6593752 -7
Belarus 1999 0.63 4,691.48 137,129,777.10 251.196 84.940 0.8417817 -7
Belarus 2002 0.3 5,867.53 560,425,013.30 34.792 88.678 0.6165247 -7
Belarus 2005 0.18 8,562.36 867,928,075.35 7.94 95.494 0.5326382 -7
Belarus 2008 12,554.94 1,175,038,273.14 13.3 0.5700745 -7
Bolivia 1981 1.99 1,957.02 0.001 25.127 3.718517 -7
Bolivia 1984 4.97 1,936.45 0.362 2,177.30 6.3097462 8
Bolivia 1987 3.85 1,935.82 54.546 10.662 2.483012 9
Bolivia 1990 4.03 2,266.99 91.167 18.01 3.1132073 9
Bolivia 1993 9.87 2,556.23 127.07 9.308 2.5187051 9
Bolivia 1996 19.15 2,852.97 167.58 7.949 2.5277865 9
Bolivia 1999 26.27 3,044.06 192.568 3.133 77.223 1.603033 9
Bolivia 2002 22.81 3,221.15 205.896 2.446 86.570 1.4993796 9
Bolivia 2005 20.47 3,664.31 234.89 4.908 1.9015261 8
Bolivia 2008 15.61 4,350.95 308.048 11.848 81.022 1.1115992 8
Bosnia and Herz. 1981 0.16
Bosnia and Herz. 1993 0.16 0
Bosnia and Herz. 1999 0.14 4,244.85 100 n/a 2.6894599
Bosnia and Herz. 2002 0.13 4,918.88 107.211 -0.4 1.1596129
Bosnia and Herz. 2005 0.16 6,022.72 113.055 4.3 1.3489084
Bosnia and Herz. 2008 7,796.34 128.764 3.809 78.378 1.6034221
Brazil 1981 17.1 3,822.61 1.714 95.623 4.1351743 -4
Brazil 1984 20.56 4,177.17 29.221 215.263 4.7441768 -3
Brazil 1987 16.68 5,107.75 832.597 363.412 2.5928025 7
Brazil 1990 15.49 5,338.05 3,208,468.24 1,620.97 0.5025434 8
Brazil 1993 15.6 5,804.69 6,675,514,294.74 2,477.15 0.9466275 8
Brazil 1996 11.43 6,632.18 91,000,433,589.3 9.564 1.2629833 8
Brazil 1999 14.85 6,864.37 106,042,484,824 8.94 99.205 3.1222729 8
Brazil 2002 13.22 7,563.49 136,162,685,395 12.53 110.032 3.0709264 8
Brazil 2005 9.23 8,603.36 169,248,856,038 5.69 105.832 1.5500052 8
Brazil 2008 6.01 10,524.65 193,109,251,856 5.902 101.340 1.002504 8
Bulgaria 1981 0.05 4,360.41 90.314 0.2169044 -7
Bulgaria 1984 0.05 5,557.31 92.145 1.1768697 -7
Bulgaria 1987 0.05 6,804.07 100.967 1.4792215 -7
Bulgaria 1990 0.06 7,174.14 0.007 64.325 99.073 2.6707772 8
Bulgaria 1993 0.19 5,782.74 0.847 63.8 93.171 2.2906818 8
Bulgaria 1996 0.29 5,509.14 10.263 310.8 93.057 6.7122277 8
Bulgaria 1999 1.02 5,881.87 72.42 6.956 92.154 3.6166495 8
Bulgaria 2002 1.32 7,375.45 87.68 3.812 95.526 2.392393 9
Bulgaria 2005 0 9,940.82 103.43 7.393 89.291 2.1139058 9
Bulgaria 2008 13,187.39 131.22 7.188 89.172 3.2682927 9
GDP.
66
*LOWER MIDDLE INCOME COUNTRIES

CPI-
SecSchEnr Polity
Country Year PopBPL GDPPC CPI Inflation IntPmt
Cameroon 1981 42.99 1,278.67 48.901 4.55 17.297 2.4588058 -8
Cameroon 1984 53.39 1,666.23 73.433 16.59 19.849 2.794717 -8
Cameroon 1987 27.63 1,879.74 98.237 18.89 23.389 2.0769488 -8
Cameroon 1990 45.67 1,627.49 95.686 -0.73 24.837 2.3165181 -8
Cameroon 1993 53.78 1,455.95 92.277 -4.06 1.4720661 -4
Cameroon 1996 51.46 1,502.93 150.066 4.57 2.856586 -4
Cameroon 1999 42.98 1,665.26 167.616 2.15 26.091 2.6198861 -4
Cameroon 2002 32.81 1,816.98 182 4.339 1.5238336 -4
Cameroon 2005 27.51 1,953.66 190.1 3.465 27.814 1.5193497 -4
Cameroon 2008 9.31 2,137.09 212.1 5.313 38.018 0.5103334 -4
Cape Verde 1981 52.9 661.108 24.408 20.67 7.910 -4
Cape Verde 1984 47.4 814.501 38.421 9.677 10.894 -4
Cape Verde 1987 45.74 947.807 46.896 3.75 14.511 1.5539083 -3
Cape Verde 1990 36.55 1,098.07 56.501 11.111 20.253 0.5912655 -2
Cape Verde 1993 41.48 1,228.80 74.304 4.373 0.5891171 8
Cape Verde 1996 31.78 1,507.16 89.078 9.106 0.585207 8
Cape Verde 1999 23.06 1,913.42 101.408 -1.592 0.6755824 8
Cape Verde 2002 21.02 2,284.94 108.018 2.967 69.486 1.1069065 10
Cape Verde 2005 18.8 2,602.59 107.084 1.76 70.710 0.7091378 10
Cape Verde 2008 10.55 3,438.44 124.951 6.672 86.587 0.4413816 10
China 1981 81.68 285.018 46.754 0.2779458 -7
China 1984 68.015 435.958 36.327 0.3853426 -7
China 1987 47.6914 621.596 37.679 8.902 43.466 0.6717111 -7
China 1990 54.8078 796.73 53.58 4.296 38.457 0.9073524 -7
China 1993 46.837 1,183.83 72.373 23.919 46.088 0.7830122 -7
China 1996 31.2055 1,680.49 107.001 7.001 55.751 0.6514527 -7
China 1999 33.404 2,164.69 105.332 -0.911 61.398 0.6643826 -7
China 2002 25.366 2,882.00 105.525 -0.588 64.449 0.442652 -7
China 2005 14.398 4,102.50 113.422 1.367 0.2875038 -7
China 2008 13.06 6,186.67 126.531 2.533 78.491 0.2042001 -7
Colombia 1981 15.86 2,672.71 3.124 26.325 41.989 2.0734338 8
Colombia 1984 13.94 3,040.15 5.346 18.28 45.157 2.5526627 8
Colombia 1987 12.85 3,659.17 9.82 24.028 51.340 4.1070219 8
Colombia 1990 8.27 4,305.37 21.004 32.355 4.4532709 8
Colombia 1993 12.11 4,964.41 40.87 22.608 60.927 2.4138409 9
Colombia 1996 13.79 5,657.39 72.811 21.639 67.602 2.1405429 7
Colombia 1999 17.15 5,649.83 109.23 9.23 72.884 3.1550629 7
Colombia 2002 15.6 6,180.94 136.81 6.991 73.552 2.3299907 7
Colombia 2005 13.89 7,339.52 161.164 4.855 82.550 2.0114831 7
Colombia 2008 11.32 9,081.69 191.627 7.675 90.519 1.2924413 7
Congo, Rep. 1981 61.91 1,516.68 65.025 0.782 67.431 6.6059488 -8
Congo, Rep. 1984 53.93 1,700.84 72.034 3.488 65.061 5.6447633 -8
Congo, Rep. 1987 42.44 1,803.43 79.914 3.537 68.181 5.8641817 -8
Congo, Rep. 1990 66.32 2,658.17 62.339 1.493 47.585 7.0018796 -8
Congo, Rep. 1993 77.6 2,737.47 65.089 0 3.3079378 5
Congo, Rep. 1996 77.85 2,810.98 105.615 5.501 46.983 13.740544 5
Congo, Rep. 1999 71.3 2,705.74 124 3.782 1.2777842 -6
Congo, Rep. 2002 72.51 3,078.93 126.417 -2.856 38.635 0.4470307 -4
Congo, Rep. 2005 54.1 3,566.12 140.548 3.053 0.8587506 -4
Congo, Rep. 2008 53.37 3,922.88 166.317 11.391 0.7992848 -4
GDP.
67
Data Series* (Lower Middle Income Countries), continued

Pop CPI- SecSch
Polity
Country Year BPL GDPPC CPI Inflation Enr IntPmt
Costa Rica 1981 21.39 2.179 65.041 45.551 6.0554159 10
Costa Rica 1984 16.3 5.143 17.391 41.310 6.107327 10
Costa Rica 1987 10.78 7.665 16.417 40.900 3.4053727 10
Costa Rica 1990 9.39 13.445 27.268 43.025 2.8993461 10
Costa Rica 1993 7.9 21.487 9.043 48.111 2.2330027 10
Costa Rica 1996 7.08 35.95 13.889 49.235 1.8564011 10
Costa Rica 1999 4.19 49.459 10.113 62.209 1.4039562 10
Costa Rica 2002 4.18 7,354.79 66.359 9.683 66.444 1.7253447 10
Costa Rica 2005 2.37 8,739.05 94.089 14.075 80.590 1.4278736 10
Costa Rica 2008 2.42 10,770.55 129.95 13.9 90.649 1.5976516 10
Djibouti 1981 6.32 9.299 -8
Djibouti 1984 3.84 10.419 -8
Djibouti 1987 4.56 11.484 -8
Djibouti 1990 0 10.722 -8
Djibouti 1993 3.91 1,989.76 83.663 5.408 10.387 0.4228434 -7
Djibouti 1996 4.66 1,760.37 95.064 2.631 12.016 0.557534 -6
Djibouti 1999 11.75 1,728.59 98.763 -0.577 13.947 0.4184442 2
Djibouti 2002 18.84 1,811.57 103.962 1.384 16.545 0.4094508 2
Djibouti 2005 18.55 2,041.72 112.878 3.483 22.643 0.4861804 2
Djibouti 2008 13.78 2,399.38 137.985 9.249 29.244 0.7293934 2
Dominican Republic 1981 16.64 2,063.13 5.708 7.365 40.781 3.3609172 6
Dominican Republic 1987 15.74 2,666.15 15.066 22.672 2.6254101 6
Ecuador 1981 11.72 2,849.52 0.967 17.3 53.353 4.4181493 9
Ecuador 1984 12.69 3,077.65 2.295 25.1 54.440 8.5226035 8
Ecuador 1987 12.82 3,124.36 4.816 32.5 57.786 4.6195036 8
Ecuador 1990 14.58 3,693.73 20.617 49.5 5.1776611 9
Ecuador 1993 15.5 4,158.65 64.961 32 54.985 2.7893961 9
Ecuador 1996 15.27 4,548.68 125.527 25.527 51.855 3.2817291 9
Ecuador 1999 14.68 4,514.22 378.073 60.7 56.763 6.9125711 9
Ecuador 2002 11.89 5,174.28 966.985 9.4 59.455 4.3896836 6
Ecuador 2005 9.78 6,371.40 1,078.10 3.1 63.939 2.7142658 6
Ecuador 2008 6.45 7,586.28 1,247.04 8.831 1.9013617 5
Egypt, Arab Rep. 1981 12 1,406.27 10.157 9.6 47.421 4.498642 -6
Egypt, Arab Rep. 1984 9.05 1,872.29 16.391 19.58 52.450 5.1028668 -6
Egypt, Arab Rep. 1987 7.23 2,206.94 29.231 25.11 58.573 1.9386497 -6
Egypt, Arab Rep. 1990 4.46 2,562.66 45.524 21.38 68.643 3.1464808 -6
Egypt, Arab Rep. 1993 3.56 2,751.32 69.323 14.953 65.492 2.6772851 -6
Egypt, Arab Rep. 1996 2.46 3,131.05 87.529 8.156 1.7806835 -6
Egypt, Arab Rep. 1999 1.81 3,709.84 98.609 2.877 80.272 0.9968173 -6
Egypt, Arab Rep. 2002 1.81 4,165.00 106.213 2.749 84.578 0.905503 -6
Egypt, Arab Rep. 2005 1.99 4,762.12 129.186 4.68 0.7818014 -3
Egypt, Arab Rep. 2008 1.69 5,901.30 180.74 20.178 0.5687002 -3
GDP.
68

CPI-
SecSchEnr Polity
El Salvador 1981 14.02 2,163.35 6.801 11.68 1.6504854 0
El Salvador 1984 15.09 2,339.59 9.719 9.798 36.110 2.8465755 6
El Salvador 1987 15.46 2,542.11 19.994 19.599 2.3282973 6
El Salvador 1990 15.24 2,915.90 34.839 19.333 1.789586 6
El Salvador 1993 15 3,701.16 53.223 15.98 43.833 1.7888359 7
El Salvador 1996 14.96 4,419.40 66.976 7.364 1.3173562 7
El Salvador 1999 13.02 5,058.15 70.418 -1.019 52.511 1.4013316 7
El Salvador 2002 13.92 5,593.27 76.563 2.791 57.627 1.9194611 7
El Salvador 2005 13.95 6,375.42 86.232 4.261 62.011 2.6967086 7
El Salvador 2008 5.44 7,410.26 100.031 5.483 61.699 2.4021919 7
Georgia 1981 1.45 10,939.04 49.143 13.892 109.403
Georgia 1984 1.7 12,978.31 62.856 6.69
Georgia 1987 1.98 14,810.64 69.302 3.115
Georgia 1990 2.24 18,183.89 76.358 3.212
Georgia 1993 2.4 19,707.97 81.866 2.07 79.836 0.3073922 4
Georgia 1996 4.71 21,887.97 86.643 2.086 78.661 0.3931472 5
Georgia 1999 9.43 24,640.52 88.837 0.562 78.961 1.5898694 5
Georgia 2002 15.73 27,352.34 93.855 1.938 80.662 1.2671105 5
Georgia 2005 14.09 30,413.04 100.001 1.9 81.621 0.4667952 7
Georgia 2008 33,958.66 106.822 3.159 88.998 1.9952708 6
Guatemala 1981 46.73 2,422.74 9.775 8.8 19.025 0.8416124 -5
Guatemala 1984 50.98 2,429.21 10.998 7.2 18.764 1.199078 -6
Guatemala 1987 52.54 2,514.71 18.68 9.3 2.4446353 3
Guatemala 1990 37.23 2,898.95 40.294 59.8 1.5272994 3
Guatemala 1993 29.31 3,250.84 56.489 11.6 24.840 1.0607172 3
Guatemala 1996 21.26 3,542.49 75.894 10.854 25.918 0.9948232 8
Guatemala 1999 15.09 3,859.76 91.677 4.916 33.349 0.9948696 8
Guatemala 2002 16.92 3,933.05 115.8 6.326 44.529 1.00106 8
Guatemala 2005 12.13 4,181.47 145.36 8.567 51.140 2.0562226 8
Guatemala 2008 13.17 4,879.65 182.95 9.4 56.389 1.9554299 8
Guyana 1981 3.06 2,280.57 1.304 29.011 8.3324612 -7
Guyana 1984 6.77 2,234.41 2.216 28.085 66.376 12.143538 -7
Guyana 1987 4.6 2,421.23 3.423 34.562 78.928 22.964083 -7
Guyana 1990 10.27 2,222.40 16.71 75.3 43.727679 -7
Guyana 1993 6.91 2,991.27 35.938 6.8 11.090385 6
Guyana 1996 8.09 3,754.79 47.128 4.485 4.8625116 6
Guyana 1999 8.7 4,195.75 55.86 8.622 88.367 5.7027469 6
Guyana 2002 7.83 4,726.62 63.679 6.089 92.601 4.5326282 6
Guyana 2005 8.24 5,213.62 76.36 8.279 93.610 1.3234252 6
Guyana 2008 7.94 6,423.66 96.479 6.37 92.025 0.4694411 6
Honduras 1981 13.36 1,730.51 10.582 9.151 5.1458473 4
Honduras 1984 13.78 1,842.14 12.867 3.659 33.858 3.5471722 6
Honduras 1987 43.65 2,030.66 14.244 2.923 3.221655 5
Honduras 1990 43.5 2,267.56 23.101 36.421 6.354486 6
Honduras 1993 30.8 2,638.42 33.76 13.047 32.486 4.9920733 6
Honduras 1996 16 2,765.08 69.146 25.312 4.9217918 6
Honduras 1999 14.44 2,839.70 100 10.888 3.4444711 7
Honduras 2002 17.19 3,153.65 129.5 8.097 1.3624699 7
Honduras 2005 22.19 3,559.16 162.7 7.748 1.1308161 7
Honduras 2008 21.36 4,256.96 206.7 10.831 64.498 0.6688516 7
GDP.
69

CPI- SecSch
Polity
Country Year PopBPL GDPPC CPI Inflation Enr IntPmt
Indonesia 1981 71.29 836.93 11.754 7.323 29.044 1.9089594 -7
Indonesia 1984 62.87 1,022.17 10.527 9.062 35.248 3.1223217 -7
Indonesia 1987 67.345 1,184.34 13.103 9.249 48.658 4.0911977 -7
Indonesia 1990 53.5784 1,539.50 16.139 9.933 47.951 3.6417281 -7
Indonesia 1993 53.4654 1,928.71 20.534 10.179 45.176 3.2570857 -7
Indonesia 1996 42.6325 2,451.59 25.782 5.082 52.588 3.0043732 -7
Indonesia 1999 46.395 2,243.90 51.485 2.005 4.6041972 6
Indonesia 2002 28.6224 2,675.61 69.617 9.875 56.405 2.310048 6
Indonesia 2005 21.2332 3,207.44 91.228 17.114 60.640 1.2269741 8
Indonesia 2008 22.64 3,985.23 113.86 11.061 70.184 0.9491291 8
Iran, Islamic Rep. 1981 3.95 3,296.07 n/a n/a 0.2259344 -4
Iran, Islamic Rep. 1990 3.85 4,491.48 8.136 14.662 52.066 0.3708694 -6
Iran, Islamic Rep. 1993 1.7 5,022.84 15.365 26.434 59.934 2.3866289 -6
Iran, Islamic Rep. 1996 1.7 5,703.98 33.045 17.386 1.2378519 -6
Iran, Islamic Rep. 1999 1.26 6,417.75 55.345 17.935 79.100 0.6086052 3
Iran, Islamic Rep. 2002 1.77 7,635.13 80.85 17.47 78.627 0.346505 3
Iran, Islamic Rep. 2005 1.45 9,144.88 118.415 10.169 76.376 0.5832254 -6
Iran, Islamic Rep. 2008 0.92 11,200.80 197.045 17.8 81.161 0.1835559 -6
Jamaica 1981 5.6 3,419.74 3.158 4.787 66.720 5.4102939 10
Jamaica 1984 4.94 4,079.51 5.171 31.158 60.876 13.492096 10
Jamaica 1987 3.97 4,893.08 7.638 8.364 61.421 9.6047367 10
Jamaica 1990 0.18 5,607.13 12.612 29.809 6.260774 10
Jamaica 1993 3.82 6,350.63 41.458 30.124 66.314 4.2354485 9
Jamaica 1996 1.74 6,641.66 76.455 15.8 3.3269902 9
Jamaica 1999 1.26 6,666.17 96.122 6.782 87.914 2.2790766 9
Jamaica 2002 0.36 7,129.19 118.66 7.23 86.671 3.7457984 9
Jamaica 2005 0.24 8,129.64 172.893 12.558 92.834 4.0015489 9
Jamaica 2008 0.13 9,016.07 249.338 16.821 95.774 5.1629913 9
Jordan 1981 0 2,425.80 41.696 17.14 77.636 2.6558482 -10
Jordan 1984 0 2,703.44 46.023 6.829 79.393 3.961436 -9
Jordan 1987 0 2,744.46 39.292 -15.462 78.998 5.5422007 -9
Jordan 1990 2.78 2,321.89 61.42 9.453 79.868 9.9005062 -4
Jordan 1993 2.77 2,652.72 69.359 1.959 83.454 4.9041369 -2
Jordan 1996 1.93 2,920.95 77.64 2.537 85.921 5.8130516 -2
Jordan 1999 1.61 3,104.90 84.176 2.824 85.014 3.140965 -2
Jordan 2002 1.16 3,556.61 86.162 0.507 85.460 2.0628089 -2
Jordan 2005 0.38 4,289.12 95.917 4.171 86.068 1.5318388 -2
Jordan 2008 0.07 5,463.26 118.118 9.071 91.084 0.993053 -3
Kazakhstan 1981 0.01 93.310
Kazakhstan 1984 0.02
Kazakhstan 1987 0.02
Kazakhstan 1990 0.55 99.692
Kazakhstan 1993 4.21 4,130.95 3.611 2,165.00 95.049 0.039604 -3
Kazakhstan 1996 4.98 3,861.29 71.115 28.638 0.6277799 -4
Kazakhstan 1999 2.18 4,289.43 95.249 18.095 92.894 1.7430972 -4
Kazakhstan 2002 5.15 6,245.88 118.769 6.686 92.657 3.0584283 -6
Kazakhstan 2005 1.15 8,657.79 146.692 7.868 95.273 3.364868 -6
Kazakhstan 2008 11,281.31 206.631 9.598 91.709 3.8544197 -6
* PopBPL: Percentage of Population Living Below the Poverty Line, CPI: Consumer Price Index, GDPPC: GDP Per
Capita, SecSchEnr: Secondary School Enrollment Ratio, IntPmt: Interest Payment as fraction of GDP.
70

Pop CPI- SecSch
Polity
Lesotho 1981 44.1 362.113 6.556 11.268 18.067 0.384453 -7
Lesotho 1984 39.46 446.49 9.627 12.621 20.964 0.5592369 -7
Lesotho 1987 44.35 485.351 14.15 11.803 23.819 0.853107 -7
Lesotho 1990 57.66 616.382 21.536 15.848 24.682 0.9152284 -7
Lesotho 1993 56.43 702.17 30.831 5.991 26.583 1.187771 8
Lesotho 1996 46.15 788.749 40.334 8.603 30.092 1.4504161 8
Lesotho 1999 44.24 867.956 50.749 6.255 30.286 2.1326142 2
Lesotho 2002 43.41 959.792 64.292 7.903 32.630 1.8525626 8
Lesotho 2005 38.73 1,093.30 73.713 5.133 36.539 0.76368 8
Lesotho 2008 37.64 1,282.00 95.493 10.541 40.856 0.3746986 8
Macedonia, FYR 1981 0 n/a n/a n/a
Macedonia, FYR 1993 0 5,166.92 n/a n/a 76.066 0.1736913 6
Macedonia, FYR 1996 0 5,298.23 74.551 -0.75 78.274 0.7416239 6
Macedonia, FYR 1999 2.14 5,974.78 77.79 3.293 82.241 1.4611823 6
Macedonia, FYR 2002 0.55 6,322.00 86.28 0.806 83.974 1.3919272 9
Macedonia, FYR 2005 0.3 7,599.82 88.04 1.581 84.367 1.6056661 9
Macedonia, FYR 2008 9,601.56 100.77 4.101 83.305 1.8625372 9
Moldova, Rep. 1981 20.2
Moldova, Rep. 1990 15.24 93.880
Moldova, Rep. 1993 20.87 1,794.31 937 837 84.099 0.0520233 7
Moldova, Rep. 1996 12.72 1,241.09 2,885.30 15.1 80.323 2.0449644 7
Moldova, Rep. 1999 44.18 1,411.99 5,448.55 43.8 82.911 4.816731 7
Moldova, Rep. 2002 17.08 1,762.17 7,174.83 4.441 83.444 3.3121312 8
Moldova, Rep. 2005 8.14 2,358.53 10,272.72 10.037 88.063 1.9649821 8
Moldova, Rep. 2008 3,002.63 14,228.51 7.339 88.235 1.3058603 8
Morocco 1981 12.23 1,189.41 36.126 13.227 25.694 5.8253753 -8
Morocco 1984 10.29 1,439.61 46.654 7.54 31.153 6.3390945 -8
Morocco 1987 6.91 1,631.80 54.584 2.398 36.869 4.6105404 -8
Morocco 1990 2.45 2,036.02 62.951 7.543 37.502 3.5712372 -8
Morocco 1993 4.91 2,114.63 74.96 5.949 36.509 5.1874547 -7
Morocco 1996 4.6 2,465.14 85.743 3.913 38.081 3.9011343 -7
Morocco 1999 6.65 2,590.40 89.779 0.907 36.640 3.0277038 -6
Morocco 2002 6.25 3,003.80 94.161 1.429 42.005 2.8430405 -6
Morocco 2005 3.29 3,585.15 98.371 2.095 49.687 1.0042051 -6
Morocco 2008 2.06 4,402.50 108 4.229 0.8606779 -6
Namibia 1981 45.39
Namibia 1984 51.63
Namibia 1987 50.11 35.836
Namibia 1990 43.28 3,074.97 38.525 n/a 37.946 6
Namibia 1993 49.14 3,375.37 55.329 9.74 52.170 6
Namibia 1996 46.41 3,642.74 72.043 8.447 55.561 6
Namibia 1999 47.3 3,870.98 90.264 7.888 57.410 6
Namibia 2002 47.15 4,400.68 121.804 12.475 63.589 6
Namibia 2005 43.75 5,532.25 134.858 3.477 63.129 6
Namibia 2008 23.05 6,697.05 169.814 10.923 6
GDP Per Capita, SecSchEnr: Secondary School Enrollment Ratio, IntPmt: Interest Payment as fraction of
GDP.
71

Nicaragua* 1981 21.01 n/a n/a n/a 5.7998782 -5
Nicaragua* 1984 29.71 n/a n/a n/a 34.138 1.7525787 -1
Nicaragua* 1987 38.6 n/a n/a n/a 33.646 0.3893829 -1
Nicaragua* 1990 39.54 n/a n/a n/a 36.783 1.1548141 6
Nicaragua* 1993 32.5 n/a n/a n/a 43.452 5.2817342 6
Nicaragua* 1996 25.23 n/a 54.775 12.097 2.8466406 8
Nicaragua* 1999 22.08 n/a 72.964 4.839 51.666 2.4642341 8
Nicaragua* 2002 18.76 n/a 84.584 3.873 60.745 1.2537871 8
Nicaragua* 2005 15.81 2,554.35 107.831 9.583 67.069 1.1285975 8
Nicaragua 2008 8.11 2,961.45 156.936 13.774 68.018 1.7437989 9
Paraguay 1981 4.78 2,222.55 1.639 28.442 27.630 1.2821627 -8
Paraguay 1984 5.59 2,288.29 3.474 28.442 31.071 1.372772 -8
Paraguay 1987 5.75 2,451.38 7.361 28.442 29.684 2.9871613 -8
Paraguay 1990 5.85 2,959.66 17.495 44.064 30.851 1.6723535 2
Paraguay 1993 10.99 3,161.79 27.738 20.37 36.561 1.2718433 7
Paraguay 1996 15.47 3,447.47 39.235 8.176 43.245 1.3581814 7
Paraguay 1999 14.33 3,451.52 50.35 5.404 57.785 1.7439275 7
Paraguay 2002 17.09 3,403.74 67.973 14.646 67.657 2.1504827 7
Paraguay 2005 9.02 3,972.45 83.9 9.817 66.602 1.9473774 8
Paraguay 2008 5.59 4,791.60 107.5 7.5 66.638 0.9894052 8
Peru 1981 1.04 3,336.41 -- n/a 58.619 4.1755658 7
Peru 1984 1.07 3,335.09 -- 111.458 61.814 3.2726799 7
Peru 1987 0.75 4,163.46 -- 114.534 64.135 1.2707702 7
Peru 1990 1.29 3,242.16 11.063 7,649.73 67.213 0.969167 8
Peru 1993 4.62 3,594.98 57.862 39.485 65.764 3.434886 1
Peru 1996 9.34 4,580.98 82.306 11.84 71.796 3.1624043 1
Peru 1999 11.64 4,894.36 96.35 3.726 83.295 2.9101293 1
Peru 2002 12.55 5,376.38 101.334 1.516 89.903 2.2907625 9
Peru 2005 8.18 6,474.70 109.072 1.494 85.491 2.4790507 9
Peru 2008 6.2 8,603.21 122.269 6.65 89.834 1.664478 9
Philippines 1981 31.41 1,471.42 23.5 16.337 63.884 6.2401006 -8
Philippines 1984 34.9 1,529.70 43.339 50.826 65.395 6.4606825 -6
Philippines 1987 31.51 1,540.54 48.852 7.047 65.348 5.5913008 8
Philippines 1990 29.67 1,872.58 72.9 18.178 70.718 4.0661414 8
Philippines 1993 28.7 1,928.69 95.6 7.658 73.993 3.895169 8
Philippines 1996 21.99 2,232.21 119.935 7.1 75.697 2.5301847 8
Philippines 1999 21.92 2,351.77 147.482 3.9 74.303 2.9735609 8
Philippines 2002 21.99 2,590.50 168.239 2.5 79.662 3.8840529 8
Philippines 2005 22.62 3,060.98 202.553 6.7 83.538 3.4635509 8
Philippines 2008 19.4 3,661.14 237.05 7.994 82.716 2.2913675 8
Sri Lanka 1981 31.01 854.126 12.367 18.27 55.498 2.3344097 6
Sri Lanka 1984 19.96 1,095.37 17.327 9.482 59.965 2.5480198 5
Sri Lanka 1987 18.01 1,279.62 21.129 10.167 67.653 2.6285934 5
Sri Lanka 1990 15.01 1,543.29 33.465 19.622 71.625 2.1343971 5
Sri Lanka 1993 14.7 1,883.17 45.807 10.32 75.206 1.420058 5
Sri Lanka 1996 16.32 2,227.17 62.175 16.801 1.3083253 5
Sri Lanka 1999 16.05 2,594.95 74.263 3.984 1.4365702 5
Sri Lanka 2002 2,864.08 101.512 11.289 85.453 1.2997346 6
Sri Lanka 2005 10.33 3,554.62 132.2 7.48 0.6369449 5
Sri Lanka 2008 5.55 4,593.20 203.7 14.374 0.8793055 6
GDP.
72

CPI-
SecSchEnr Polity
Suriname 1981 17.21 n/a n/a n/a 34.370
Suriname 1984 17.83 n/a n/a n/a 45.989
Suriname 1987 18.57 n/a n/a n/a 59.932
Suriname 1990 18.57 n/a 108.561 n/a 57.065
Suriname 1993 9.88 n/a 722.332 224.845 51.770
Suriname 1996 15.94 n/a 6,824.07 0.488
Suriname 1999 15.54 4,742.53 21,117.69 112.8
Suriname 2002 15.74 5,197.22 50,397.96 28.39 74.351
Suriname 2005 14.22 6,944.81 71,954.60 15.789 70.351
Suriname 2008 10.2 8,326.09 89,311.42 9.327 76.344
Swaziland 1981 89.91 1,318.26 13.711 14.41 34.900 -10
Swaziland 1984 84.91 1,503.63 20.073 18.65 37.529 -10
Swaziland 1987 84.94 1,968.84 30.038 16.253 -10
Swaziland 1990 83.68 2,629.70 42.684 10.985 0.8223058 -10
Swaziland 1993 78.59 2,863.43 57.47 13.199 46.180 0.435371 -9
Swaziland 1996 75.95 3,142.34 76.19 5.763 47.191 0.631547 -9
Swaziland 1999 66.62 3,454.41 93.961 9.098 44.413 1.1997346 -9
Swaziland 2002 63 3,736.07 123.508 11.486 41.975 0.6940024 -9
Swaziland 2005 62.35 4,336.25 143.611 7.631 46.613 0.6070437 -9
Swaziland 2008 47.1 4,940.26 186.591 12.904 0.6762717 -9
Thailand 1981 21.92 1,226.30 n/a n/a 27.857 3.4037567 2
Thailand 1984 21.15 1,562.79 n/a n/a 30.410 2.9475416 2
Thailand 1987 16.97 1,923.08 47.3 3.728 29.810 2.6565688 2
Thailand 1990 9.43 2,910.23 55.1 6.371 29.061 2.404354 3
Thailand 1993 5.7 3,849.31 62.1 4.37 38.188 1.7710343 9
Thailand 1996 1.89 5,002.43 73.2 4.721 55.140 2.9325631 9
Thailand 1999 3.06 4,695.22 82.7 0.608 5.6940043 9
Thailand 2002 0.7 5,516.44 85.9 1.657 63.917 2.0811566 9
Thailand 2005 0.4 7,132.49 95.2 5.778 70.898 0.9678869 9
Thailand 2008 0.37 8,637.95 102.1 0.393 74.977 0.6773333 4
Tunisia 1981 9.71 2,120.76 n/a n/a 27.068 2.9374498 -8
Tunisia 1984 8.65 2,519.64 n/a n/a 34.142 3.3159363 -8
Tunisia 1987 8.14 2,767.64 n/a n/a 38.781 4.0885156 -5
Tunisia 1990 5.87 3,177.44 58.823 n/a 44.030 3.7660364 -5
Tunisia 1993 6.21 3,711.62 68.784 4.745 48.887 3.6734596 -3
Tunisia 1996 6.16 4,248.91 79.18 3.19 61.713 3.0100401 -3
Tunisia 1999 2.82 5,004.38 86.804 2.83 73.761 2.9262331 -3
Tunisia 2002 1.86 5,731.28 93.045 1.676 79.482 2.7710105 -4
Tunisia 2005 1.01 7,182.36 102.01 3.75 85.481 3.104599 -4
Tunisia 2008 0.83 8,887.60 115.154 4.033 92.136 2.1963031 -4
Turkmenistan 1981 24.69 n/a n/a n/a
Turkmenistan 1993 63.53 2,139.60 0.078 n/a 0.0536273 -9
Turkmenistan 1996 41.7 1,511.08 82.316 445.756 1.6701016 -9
Turkmenistan 1999 24.82 1,601.11 143.956 20.138 4.3860771 -9
Turkmenistan 2002 18.91 2,674.66 186.205 7.805 2.2347248 -9
Turkmenistan 2005 11.72 4,050.96 230.83 10.354 0.6081533 -9
Turkmenistan 2008 5,930.90 292.594 8.936 0.1822631 -9
GDP.
73

CPI-
SecSchEnr Polity
Ukraine 1981 2.95 94.293
Ukraine 1984 1.98 94.915
Ukraine 1987 1.77 97.364
Ukraine 1990 1.24 95.691
Ukraine 1993 0.03 4,502.66 300,020.28 10,155.04 90.645 0.0969279 5
Ukraine 1996 1.93 2,969.44 5,859,814.88 39.623 1.0601151 7
Ukraine 1999 2.03 3,022.02 9,249,005.10 19.427 98.081 2.2034969 7
Ukraine 2002 0.51 4,003.07 12,273,936.56 -0.513 99.204 2.0655207 6
Ukraine 2005 0.1 5,583.95 16,454,993.66 10.297 91.529 1.6733054 6
Ukraine 2008 7,287.09 26,194,956.23 22.337 94.697 2.0760604 7
GDP.
74

Argentina 1981 0.38 4,916.74 -- 131.275 57.3326 4.477929 -8
Argentina 1984 0.36 5,497.43 -- 687.981 66.15618 6.088652 8
Argentina 1987 0.38 5,844.42 0.012 174.79 70.43604 3.828682 8
Argentina 1990 0.41 5,601.57 41.077 1,343.93 72.33086 2.009476 7
Argentina 1993 0.54 7,537.47 100 12.567 1.391163 7
Argentina 1996 1.57 8,371.93 105.581 0.054 78.25818 2.309442 7
Argentina 1999 2.91 9,170.04 104.701 -1.81 84.93886 3.644121 8
Argentina 2002 9.92 7,981.89 144.235 40.953 87.05425 2.2202 8
Argentina 2005 4.5 10,859.67 178.184 12.327 84.91157 1.677643 8
Argentina 2008 1.94 14,407.64 227.658 7.238 85.84361 0.96689 8
Botswana 1981 35.59 2,060.14 15.903 14.6 20.34196 0.687747 6
Botswana 1984 41.38 2,891.51 20.673 6.5 24.95558 1.379191 6
Botswana 1987 37.87 3,778.17 27.336 8.1 31.26124 2.05639 7
Botswana 1990 25.62 5,311.87 37.619 12 40.11834 1.053589 7
Botswana 1993 31.23 5,847.86 55.616 12.7 52.2648 0.739062 7
Botswana 1996 31.94 6,454.46 74.157 9.6 1.72303 7
Botswana 1999 23.55 8,265.08 92.183 8.413 73.1519 0.383267 8
Botswana 2002 25.68 10,127.49 116.962 10.6 74.98104 0.299709 8
Botswana 2005 23.05 12,513.13 149.373 11.285 76.87836 0.135191 8
Botswana 2008 11.92 14,920.27 199.277 13.678 0.065461 8
Chile 1981 6.27 3,208.76 8.229 11.17 63.36649 5.711923 -7
Chile 1984 11.94 3,117.24 15.149 23.599 71.93083 13.58852 -6
Chile 1987 10.52 3,690.62 27.313 21.133 8.660913 -6
Chile 1990 4.37 4,811.46 47.3 27.235 78.19454 6.013161 8
Chile 1993 2.6 6,431.64 71.438 12.572 77.38018 2.387546 8
Chile 1996 0.43 8,195.70 90.095 6.634 1.761458 8
Chile 1999 0.86 9,021.95 102.324 2.322 79.20423 2.228608 8
Chile 2002 1.03 10,194.28 112.995 2.867 85.83591 2.665334 9
Chile 2005 0.71 12,244.21 121.321 3.664 90.77296 1.40108 9
Chile 2008 1.24 14,599.43 143.729 7.098 89.86787 1.22916 10
Costa Rica 1981 21.39 2.179 65.041 45.55053 6.055416 10
Costa Rica 1984 16.3 5.143 17.391 41.3104 6.107327 10
Costa Rica 1987 10.78 7.665 16.417 40.89979 3.405373 10
Costa Rica 1990 9.39 13.445 27.268 43.02546 2.899346 10
Costa Rica 1993 7.9 21.487 9.043 48.11059 2.233003 10
Costa Rica 1996 7.08 35.95 13.889 49.23458 1.856401 10
Costa Rica 1999 4.19 49.459 10.113 62.20911 1.403956 10
Costa Rica 2002 4.18 7,354.79 66.359 9.683 66.44447 1.725345 10
Costa Rica 2005 2.37 8,739.05 94.089 14.075 80.59043 1.427874 10
Costa Rica 2008 2.42 10,770.55 129.95 13.9 90.64926 1.597652 10
Croatia 1981 0.03
Croatia 1984 0.03
Croatia 1987 0.03
Croatia 1990 0.03
Croatia 1993 0.06 6,979.36 69.9 1,148.21 82.65357 -3
Croatia 1996 0.06 9,116.85 72.9 3.404 80.54232 -5
Croatia 1999 0.19 10,061.43 85.3 3.898 84.28241 1
Croatia 2002 0.06 12,399.90 93.8 1.846 87.62424 8
Croatia 2005 0.06 15,254.19 101.6 3.673 92.58827 9
Croatia 2008 18,685.90 112.8 2.826 94.29039 9
GDP.
75
Data Series* (Upper Middle Income Countries), continued

CPI-
SecSchEnr Polity
Czech Republic 1981 0 n/a n/a n/a
Czech Republic 1984 0 n/a n/a n/a 94.07965
Czech Republic 1993 0 n/a n/a n/a 89.6206 10
Czech Republic 1996 0.13 13,501.41 72.3 8.722 99.02672 10
Czech Republic 1999 0.12 14,119.60 87 2.353 82.0452 10
Czech Republic 2002 0.12 16,352.63 94.8 0.637 94.51002 10
Czech Republic 2005 0.11 20,281.02 100.6 2.236 94.47149 10
Czech Republic 2008 25,182.35 111.8 3.614 91.53072 8
Estonia 1981 0.04
Estonia 1984 0.04
Estonia 1987 0.05
Estonia 1990 0.19 103.30193
Estonia 1993 0.79 5,719.63 83.29 n/a 95.55093 6
Estonia 1996 0.21 6,841.46 114.833 14.833 92.0401 6
Estonia 1999 0.35 8,777.42 139.915 3.884 94.18635 7
Estonia 2002 0.51 12,050.22 157.261 2.682 95.53144 9
Estonia 2005 0.46 16,618.43 172.818 3.556 99.07052 9
Estonia 2008 20,319.87 212.975 6.978 102.06126 9
Gabon 1981 3.59 1,564.04 33.61838 3.396257 -9
Gabon 1984 3.79 1,737.08 37.15692 2.578193 -9
Gabon 1987 1.03 1,741.02 40.85887 2.415245 -9
Gabon 1990 1.92 2,401.52 2.544148 -6
Gabon 1993 3.61 2,666.86 100.5 n/a 2.296955 -4
Gabon 1996 9.81 3,146.26 106.4 2.406 49.86196 5.008007 -4
Gabon 1999 5.45 3,429.46 118.6 0.169 47.91228 6.276515 -4
Gabon 2002 2.75 3,644.51 126.941 1.588 53.07932 3.801248 -4
Gabon 2005 4.84 4,161.19 140.934 3.137 0.742098 -4
Gabon 2008 2.49 4,493.94 167.325 6.843 1.800689 -4
Hungary 1981 0.06 5,830.82 n/a n/a 85.62178 -7
Hungary 1984 0.05 7,139.18 n/a n/a 85.83468 -7
Hungary 1987 0.05 8,254.16 n/a n/a 87.73511 -7
Hungary 1990 0.05 9,055.43 13.457 33.4 86.98627 10
Hungary 1993 0.15 8,338.80 26.198 21.1 10
Hungary 1996 0.18 9,452.27 48.788 19.762 92.62096 10
Hungary 1999 0.18 11,261.08 70.853 11.235 93.1642 10
Hungary 2002 0.07 13,657.92 87.312 4.814 99.35377 10
Hungary 2005 0.13 16,930.86 100.577 3.3 96.60742 10
Hungary 2008 19,460.01 119.067 3.502 97.21944 10
Latvia 1981 0.03 100.07492
Latvia 1984 0.03 103.26202
Latvia 1987 0.02 102.97448
Latvia 1990 0 95.99913
Latvia 1993 0 4,652.86 40.826 34.755 88.19115 0.146601 8
Latvia 1996 0.42 5,537.50 71.86 13.118 88.04438 1.070631 8
Latvia 1999 0 6,977.68 80.87 3.006 88.64133 2.447206 8
Latvia 2002 0 9,319.32 86.14 1.472 93.32631 1.713516 8
Latvia 2005 0.34 13,181.39 102.56 7.09 98.25541 3.375004 8
Latvia 2008 17,181.42 137.83 10.396 99.8547 5.265368 8
GDP.
76

Lithuania 1981 0.07
Lithuania 1984 0.06
Lithuania 1987 0.06
Lithuania 1990 0.04 95.36314
Lithuania 1993 2.18 84.46341 0.053896 10
Lithuania 1996 0 87.6686 0.506167 10
Lithuania 1999 0.32 7,946.30 94.4 n/a 95.5809 2.006432 10
Lithuania 2002 0.42 10,093.00 97.05 -0.899 102.06372 2.55606 10
Lithuania 2005 0.43 14,218.14 101.46 3.016 100.54269 1.275832 10
Lithuania 2008 19,138.18 124.48 8.46 98.32318 2.282811 10
Malaysia 1981 3.8 2,682.32 44.893 8.467 49.09574 2.889806 4
Malaysia 1984 3.22 3,456.25 49.682 1.716 52.67252 4.640729 4
Malaysia 1987 2.39 3,636.75 51.118 0.392 58.25084 5.500249 4
Malaysia 1990 1.91 4,838.69 57.817 7.007 56.04358 2.766195 4
Malaysia 1993 1.62 6,361.59 65.45 3.467 55.95092 2.127054 4
Malaysia 1996 1.31 8,244.14 72.205 3.262 2.167172 3
Malaysia 1999 1.93 8,464.02 80.189 2.466 66.39524 2.613211 3
Malaysia 2002 1.13 9,505.86 83.435 1.603 66.9078 2.072532 3
Malaysia 2005 0.54 11,379.96 89.05 3.255 70.29899 1.659625 3
Malaysia 2008 n/a 14,032.76 98.087 4.388 69.05814 1.173825 6
Mexico 1981 11.3 5,773.14 0.109 27.071 47.83256 4.069904 -3
Mexico 1984 12.79 6,140.05 0.623 59.172 55.75869 6.82682 -3
Mexico 1987 10.81 6,303.74 5.44 159.172 56.98368 6.238519 -3
Mexico 1990 5.4 7,356.87 12.83 29.929 54.81069 2.873498 0
Mexico 1993 3.91 8,343.94 18.427 8.009 54.11014 2.049077 0
Mexico 1996 6.98 8,726.60 38.282 27.705 61.27137 3.623951 4
Mexico 1999 6.42 10,185.95 59.016 12.319 70.02147 2.561518 6
Mexico 2002 3.73 10,875.10 70.962 5.7 76.80928 1.614857 8
Mexico 2005 1.07 12,482.54 80.2 3.333 82.30405 1.267443 8
Mexico 2008 1.15 14,506.46 92.241 6.528 86.82145 0.876504 8
Panama 1981 6.81 3,208.38 91.6 3.269 60.60051 7.646037 -6
Panama 1984 10.01 3,555.07 98.921 1.457 59.29282 6.84586 -6
Panama 1987 13.07 3,857.77 100.642 0.436 60.00588 4.4157 -8
Panama 1990 17.28 3,885.25 102.295 0.496 61.3962 4.424547 8
Panama 1993 13.7 4,963.64 105.8 0.954 64.23457 1.952007 8
Panama 1996 13.67 5,615.31 110.6 2.313 67.11079 4.777524 9
Panama 1999 7.98 6,623.45 113.3 1.523 66.88143 3.780942 9
Panama 2002 12.35 6,823.80 116.1 1.753 70.11607 4.248935 9
Panama 2005 11.17 8,354.02 121.557 3.356 70.07108 4.318582 9
Panama 2008 7.45 11,528.48 141.062 6.766 71.44464 3.220132 9
Poland 1981 0.13 4,104.85 n/a n/a 83.45483 -8
Poland 1984 0.13 4,555.35 0.77 n/a 81.95111 -7
Poland 1987 0.1 5,327.36 3.62 54.701 85.13254 -6
Poland 1990 1.39 5,843.98 13.654 86.538 87.89146 5
Poland 1993 4.19 6,213.88 43.538 37.683 94.46546 8
Poland 1996 1.4 7,853.74 81.344 18.5 9
Poland 1999 0.09 9,628.52 109.801 9.801 99.7174 9
Poland 2002 0.11 11,063.99 124.411 0.8 103.83635 10
Poland 2005 0.1 13,571.35 133.017 0.7 99.63402 10
Poland 2008 17,592.49 144.904 3.3 97.72794 10
GDP.
77

Pop CPI- SecSch
Polity
Romania 1981 0.22 3,936.53 n/a n/a -8
Romania 1984 0.23 5,192.07 n/a n/a -8
Romania 1987 0.24 5,712.43 n/a n/a -8
Romania 1990 0.26 5,577.77 0.122 n/a 101.56568 0.037737 5
Romania 1993 2.68 4,927.07 4.656 295.481 81.35924 0.790982 5
Romania 1996 1.95 6,165.48 15.094 56.9 76.52464 1.434172 8
Romania 1999 2.71 5,777.79 82.583 54.81 81.25241 1.590733 8
Romania 2002 2.86 7,248.95 177.022 17.58 83.91038 1.475861 8
Romania 2005 0.75 9,403.21 240.059 8.834 84.24103 1.619027 9
Romania 2008 12,640.41 286.181 6.4 93.18003 1.85472 9
Russian Federation 1981 0.71 95.72107
Russian Federation 1987 0.51
Russian Federation 1993 1.5 7,343.79 10.149 839.9 88.30719 0.176199 3
Russian Federation 1996 2.81 6,307.79 90.09 21.8 1.075597 3
Russian Federation 2002 0.32 8,830.07 413.008 15.1 2.115003 6
Russian Federation 2008 16,040.35 791.858 13.3 85.99913 1.400336 4
Slovak Republic 1981 0 n/a n/a n/a
Slovak Republic 1993 0 7,452.67 43.916 n/a 87.89008 7
Slovak Republic 1996 0.26 9,570.88 55.61 5.462 91.19271 7
Slovak Republic 1999 0.04 10,858.56 71.44 14.176 83.7918 9
Slovak Republic 2002 0 12,692.57 85.24 3.121 86.41544 9
Slovak Republic 2005 0 16,031.05 102 3.669 91.16334 9
Slovak Republic 2008 21,995.00 111.87 3.507 89.33977 10
South Africa 1981 34.69 4,416.23 13.3 13.675 4
South Africa 1984 35.82 4,816.58 19 13.095 4
South Africa 1987 30.86 4,913.58 30.5 14.662 4
South Africa 1990 22.06 5,458.49 45.4 14.937 65.98008 5
South Africa 1993 24.3 5,431.38 63.4 9.689 8
South Africa 1996 22.95 6,026.36 81.3 9.274 1.043199 9
South Africa 1999 25.11 6,325.40 96.4 2.444 88.32965 1.112289 9
South Africa 2002 24.96 7,187.79 121.2 12.43 87.45332 0.93903 9
South Africa 2005 20.55 8,653.71 130.3 3.577 92.38011 0.494941 9
South Africa 2008 13.56 10,401.35 165.319 10.066 92.54634 0.664082 9
St. Lucia 1981 23.95 2,479.68 47.58 9.463 27.09806 0.351048
St. Lucia 1984 24.43 3,074.96 49.22 1.534 31.22376 0.287223
St. Lucia 1987 25.78 4,074.42 54.581 5.066 43.24474 0.667795
St. Lucia 1990 26.76 6,017.44 61.014 6.012 49.92321 0.850419
St. Lucia 1993 23.17 6,922.81 67.398 0.728 67.80593 1.122876
St. Lucia 1996 20.93 7,384.40 72.953 -2.285 1.178246
St. Lucia 1999 19.71 7,986.90 78.587 1.999 70.60611 1.221362
St. Lucia 2002 20.39 7,745.17 85.916 -0.676 72.94219 1.626335
St. Lucia 2005 17.82 9,736.92 94.006 5.18 78.10765 2.231064
St. Lucia 2008 15.79 12,002.48 104.514 3.405 92.98572 2.789099
GDP.
78

Pop CPI- SecSch Pol
Country Year BPL GDPPC CPI Inflation Enr IntPmt ity
Trinidad and Tobago 1981 0 n/a n/a n/a 68.8167 8
Trinidad and Tobago 1984 0 n/a n/a n/a 76.41202 9
Trinidad and Tobago 1987 1.42 n/a n/a n/a 83.001 9
Trinidad and Tobago 1990 4.36 n/a n/a n/a 85.17226 9
Trinidad and Tobago 1993 4.16 n/a 73.321 16.799 78.92922 9
Trinidad and Tobago 1996 7.6 n/a 83.795 4.348 9
Trinidad and Tobago 1999 3.71 n/a 94.697 3.424 77.8651 10
Trinidad and Tobago 2002 1.66 11,918.33 107.638 4.3 76.10099 10
Turkey 1981 4.5 3,078.43 n/a n/a 34.65248 2.136981 -5
Turkey 1984 2.74 3,657.54 n/a n/a 36.98287 3.125243 7
Turkey 1987 1.32 4,549.75 0.035 55.027 41.98563 2.913285 7
Turkey 1990 1.51 5,558.24 0.153 60.425 46.68592 2.302665 9
Turkey 1993 2.1 6,580.52 0.742 71.076 53.07075 2.265766 8
Turkey 1996 1.53 7,181.25 5.08 80.142 2.482527 8
Turkey 1999 1.58 7,218.77 28.95 68.805 69.03472 2.348884 7
Turkey 2002 2 7,803.01 87.94 29.705 86.82721 2.480853 7
Turkey 2005 2.72 11,116.96 122.65 7.72 82.01812 1.78449 7
Turkey 2008 13,107.55 160.44 10.064 85.47801 1.862968 7
Uruguay 1981 0 3,799.41 0.027 29.361 64.68487 1.782457 -7
Uruguay 1984 0.19 3,698.99 0.082 66.125 70.73135 7.817794 -7
Uruguay 1987 0 4,695.63 0.403 57.285 73.97738 5.065626 9
Uruguay 1990 0 5,295.71 2.949 128.954 81.25183 4.777463 10
Uruguay 1993 0.76 6,466.16 13.001 52.882 81.90276 1.779262 10
Uruguay 1996 0.96 7,501.17 31.545 24.328 85.12613 1.813014 10
Uruguay 1999 0.52 8,149.84 41.11 4.181 92.16417 2.03485 10
Uruguay 2002 0.19 7,580.57 56.34 25.956 106.22462 3.502739 10
Uruguay 2005 0.09 9,694.79 70.06 4.896 101.4214 3.728676 10
Uruguay 2008 0.26 12,692.18 88.31 9.2 87.86821 1.639006 10
Venezuela, RB 1981 6.23 5,831.95 n/a n/a 50.7952 4.172336 9
Venezuela, RB 1984 8.08 5,902.36 106.456 n/a 54.23381 5.323555 9
Venezuela, RB 1987 8.72 6,628.22 183.666 40.275 57.06052 6.282381 9
Venezuela, RB 1990 3.08 7,015.22 614.828 36.478 55.48198 7.009875 9
Venezuela, RB 1993 2.62 8,271.58 1,550.11 45.941 56.96501 3.833215 8
Venezuela, RB 1996 15.2 8,338.70 8,429.32 103.243 3.231706 8
Venezuela, RB 1999 14.76 8,223.30 18,086.42 20.028 56.89162 2.568902 7
Venezuela, RB 2002 18.62 8,119.58 30,225.87 31.215 67.81086 2.509127 6
Venezuela, RB 2005 10.84 9,992.03 52,355.17 14.358 74.38677 2.045108 6
Venezuela, RB 2008 5.14 12,860.15 98,161.99 30.9 81.64491 1.06876 5
GDP.
79

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THE EFFECT OF INFLATION ON POVERTY IN DEVELOPING COUNTRIES:

A PANEL DATA ANALYSIS

SHAHIDUR RASHID TALUKDAR, M.S.

Submitted to the Graduate Faculty

Dr. Masha Rahnama

Chairperson of the Committee

Dr. Victor Valcarcel

Dean of the Graduate School

1.1. MOTIVATION ..................................................................................................... 1

2.1. DEFINITION AND MEASUREMENT OF POVERTY .......................................... 4

4.1. POVERTY DATA.............................................................................................. 15

6.1. PANEL LEAST SQUARED MODEL ................................................................. 21

6.1.4. Upper Middle Income Countries ................................................................ 27

A. WORLD BANK INCOME BASED CLASSIFICATION OF COUNTRIES ...................54

B. DATA SERIES .........................................................................................................56

2. Countries according to Level of Income 15

4. Results from the Panel Least Squared Model 25

5. Results from the Country Fixed Effects Model (CFE) 30

6. Results from the Period Fixed Effects Model (PFE) 33

7. Results from the Country & Period Fixed Effects Model 34

8. Results from the Dynamic Panel Model 36

9. Results from the Dynamic Panel Model with CFE 40

10.Results from the Dynamic Panel Model with PFE 41

11.Results from the Dynamic Panel Model with CFE+PFE 42

1.3. RESEARCH OBJECTIVES

1) How does the CPI inflation correlate with poverty?

2) Is the relationship between inflation and poverty similar in countries with

To answer these questions, I employ multivariate regression analysis panel data

This brief introduction is followed by a detailed review of the existing literature in

2.1. DEFINITION AND MEASUREMENT OF POVERTY

Fundamentally, poverty is a denial of choices and opportunities, a violation of human

(UN Statement, June 1998 signed by the heads of all UN agencies)

This is a multidimensional definition of poverty which covers nearly all areas of

"Poverty is pronounced deprivation in well-being, and comprises many dimensions. It

2.2. THE STATUS OF POVERTY IN THE WORLD

% Population Below Poverty Line # of Poor (in Hundred Millions)

Figure 1 - Declining Poverty*

2.3. POVERTY AND INFLATION

macroeconomic variables such as growth, unemployment, business cycles, inflation and

Powers (1995) adopted a consumption based approach to measure poverty in the

2.4. EFFECT OF INFLATION ON POVERTY: POSITIVE OR NEGATIVE

elasticity of poverty is found to be significantly less than the output (employment)

2.5. INFLATION INEQUALITY

For example, those involved in transportation business will be more affected by

Chani, et al. (2011) have analyzed the impact of macroeconomic parameters on

2.6. SUMMARY OF THE LITERATURE REVIEW

The literature reviewed so far can be summarized as follows. First, inflation is

For the regression models, I consider absolute poverty level as my dependent

I consider educational attainment as another control variable as educational

For the empirical analysis, I consider absolute poverty measured by poverty

Table 1. Summary Statistics of the dataset

Workfile structure: Panel Annual

Table 2. Countries according to their Level of Income

Mean GDP per capita

1 Low Income Countries 45 1684.272

4.1. POVERTY DATA

Table 3. Descriptive Statistics of the dependent and independent variables.

Mean 30.99668 85.26739 1.79E+09 3671.737 2.127057 49.30444 1.004967

The column POPBPL represents the dependent variable - percentage of

4.2. CONSUMER PRICE INDEX (CPI) DATA

4.3. GROSS DOMESTIC PRODUCT (GDP) PER CAPITA DATA

4.4. EXTERNAL DEBT DATA

4.5. SECONDARY SCHOOL ENROLLMENT RATIO

Therefore, F(114, 1030) = {(0.9399 0.6858)1030}/{114(1 0.9399)} = 38.199.