Purchasing power parities and the Dollar-A-Day approach: An unstable relationship

Michail Moatsos; Achillefs Lazopoulos

doi:10.1016/j.econlet.2021.109974

Purchasing power parities and the Dollar-A-Day approach: An unstable relationship

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Abstract

We show that the Dollar-A-Day methodology in global poverty measurement provides inconsistent International Poverty Line (iPL) solutions when a complete set of consistency criteria in the iPL definition is used. This article illustrates that minor fluctuations in purchasing power parity exchange rates can yield inconsistent iPLs. We find a rate of inconsistency of 46.1% and we conclude that this is a worrisome attribute of the method.

Original language	English
Article number	109974
Pages (from-to)	1-4
Journal	Economics Letters
Volume	206
Early online date	5 Jul 2021
DOIs	https://doi.org/10.1016/j.econlet.2021.109974
Publication status	Published - Sept 2021

Keywords

Dollar-A-Day
Error
Global poverty
Inconsistency
Monte Carlo
PPP

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1-s2.0-S0165176521002512-mainFinal published version, 331 KBLicence: CC BY

Cite this

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abstract = "We show that the Dollar-A-Day methodology in global poverty measurement provides inconsistent International Poverty Line (iPL) solutions when a complete set of consistency criteria in the iPL definition is used. This article illustrates that minor fluctuations in purchasing power parity exchange rates can yield inconsistent iPLs. We find a rate of inconsistency of 46.1% and we conclude that this is a worrisome attribute of the method.",

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Purchasing power parities and the Dollar-A-Day approach: An unstable relationship

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Keywords

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