Multiplier Decomposition, Poverty and Inequality in Income Distribution in a SAM Framework: the Vietnamese Case

The aim of this paper is to show how and why is possible to assess both direct and indirect effects of exogenous income injections on mean income of different household groups using a new approach based on the decomposition of SAM-based multipliers. The approach we propose in this paper allows analyzing the level of inequality in the distribution of income linking the formation of individual/family income to the features of each country’s productive structure and it can be used both for structural analysis and for simulations of redistributive and antipoverty policies. The first step in order to link changes in the level of poverty and inequality to policy measures will be to derive the “accounting price multipliers matrix”, which allows considering the effects of policies affecting the labour market, thus changing the level of wages for different workers ‘categories. Using the traditional Pyatt and Round’s multiplicative decomposition method, we will be then able to disentangle the transfer, the open-loop and the closed-loop effects of a change in the income of exogenous SAM’s accounts. The second step will be to use a new technique introduced by Pyatt and Round (2006) to further decompose each element of the total multiplier matrix in order to enlighten in “microscopic detail” the linkages between each household group’s income of and other accounts whose income has been exogenously injected (i.e. Activities account and Factors account). Moreover, this new approach allows assessing the linkages between each household endowment in terms of factors and the features of the productive system and shading light on the most powerful links among different components of the economic system affecting the distribution of income. The empirical results obtained using the Vietnamese SAM for year 2000 show that the highest direct effects are related to exogenous injections to the agricultural sector and to less skilled labour force and that these effects involved not only on rural male headed but also other household groups. At the same time, the new type of multiplier decomposition shows which are the sectors and factors of production whose increase in income will have the greater indirect effects, increasing also the level of income of all household types. For example, investing in the sector of food processing and on female labour force will benefit the most all household groups, thus representing a policy option good for aggregate growth and for improving the distribution of income.Income distribution, social accounting matrix, multiplier decomposition, growth, labour market, structure of production

Setting a new International Poverty Line: a new proposal applied to Vietnam

The poverty line, which has been set by the World Bank in 1990 at 1.08USD/day PPA contains three major errors: it does not refer to a clear definition of poverty; it uses wrong PPA factors converting national poverty lines and it is based on limited data from two countries with the highest poverty incidence. All these errors lead to a systematic underestimate of world poverty. The objective of the paper is be then to evaluate the accuracy of international poverty estimates produced by the World Bank. The case study analyzed in the paper is Vietnam, a country which experiences impressive achievements in term of poverty reduction in the last twenty years. The specific aim of this study is then twofold. Firs, it will construct a new international poverty line using different PPA conversion factors giving more weight to goods consumed by the poorest people. Second, it will design a poverty map for Vietnam using this new poverty threshold. Results indicate that using more accurate PPA conversion factors poverty rates are much higher than the current estimates and this suggest a general revision in the method of setting an international poverty threshold.povertà, disuguaglianza, linee di povertà, poverty map

La Fissazione della International Poverty Line: una nuova proposta applicata al Vietnam

The poverty line, which has been set by the World Bank in 1990 at 1.08USD/day PPA contains three major errors: it does not refer to a clear definition of poverty; it uses wrong PPA factors converting national poverty lines and it is based on limited data from two countries with the highest poverty incidence. All these errors lead to a systematic underestimate of world poverty. The objective of the paper is be then to evaluate the accuracy of international poverty estimates produced by the World Bank. The case study analyzed in the paper is Vietnam, a country which experiences impressive achievements in term of poverty reduction in the last twenty years. The specific aim of this study is then twofold. Firs, it will construct a new international poverty line using different PPA conversion factors giving more weight to goods consumed by the poorest people. Second, it will design a poverty map for Vietnam using this new poverty threshold. Results indicate that using more accurate PPA conversion factors poverty rates are much higher than the current estimates and this suggest a general revision in the method of setting an international poverty threshold

La Fissazione della International Poverty Line: una nuova proposta applicata al Vietnam

The poverty line, which has been set by the World Bank in 1990 at 1.08USD/day PPA contains three major errors: it does not refer to a clear definition of poverty; it uses wrong PPA factors converting national poverty lines and it is based on limited data from two countries with the highest poverty incidence. All these errors lead to a systematic underestimate of world poverty. The objective of the paper is be then to evaluate the accuracy of international poverty estimates produced by the World Bank. The case study analyzed in the paper is Vietnam, a country which experiences impressive achievements in term of poverty reduction in the last twenty years. The specific aim of this study is then twofold. Firs, it will construct a new international poverty line using different PPA conversion factors giving more weight to goods consumed by the poorest people. Second, it will design a poverty map for Vietnam using this new poverty threshold. Results indicate that using more accurate PPA conversion factors poverty rates are much higher than the current estimates and this suggest a general revision in the method of setting an international poverty threshold

Multiplier Decomposition, Poverty and Inequality in Income Distribution in a SAM Framework: the Vietnamese Case

The aim of this paper is to show how and why is possible to assess both direct and indirect effects of exogenous income injections on mean income of different household groups using a new approach based on the decomposition of SAM-based multipliers. The approach we propose in this paper allows analyzing the level of inequality in the distribution of income linking the formation of individual/family income to the features of each country’s productive structure and it can be used both for structural analysis and for simulations of redistributive and antipoverty policies. The first step in order to link changes in the level of poverty and inequality to policy measures will be to derive the “accounting price multipliers matrix”, which allows considering the effects of policies affecting the labour market, thus changing the level of wages for different workers ‘categories. Using the traditional Pyatt and Round’s multiplicative decomposition method, we will be then able to disentangle the transfer, the open-loop and the closed-loop effects of a change in the income of exogenous SAM’s accounts. The second step will be to use a new technique introduced by Pyatt and Round (2006) to further decompose each element of the total multiplier matrix in order to enlighten in “microscopic detail” the linkages between each household group’s income of and other accounts whose income has been exogenously injected (i.e. Activities account and Factors account). Moreover, this new approach allows assessing the linkages between each household endowment in terms of factors and the features of the productive system and shading light on the most powerful links among different components of the economic system affecting the distribution of income. The empirical results obtained using the Vietnamese SAM for year 2000 show that the highest direct effects are related to exogenous injections to the agricultural sector and to less skilled labour force and that these effects involved not only on rural male headed but also other household groups. At the same time, the new type of multiplier decomposition shows which are the sectors and factors of production whose increase in income will have the greater indirect effects, increasing also the level of income of all household types. For example, investing in the sector of food processing and on female labour force will benefit the most all household groups, thus representing a policy option good for aggregate growth and for improving the distribution of income

Spatial Dynamic Modelling of Tax Gap: the Case of Italy

This paper analyses the determinants of regional tax gap in Italy testing if tax evasion is characterised by spatial persistence. The size of spatial correlation in regional tax gaps has been tested and the role of additional determinants of evasion over the period 2001–2011 has been estimated. Using a dynamic spatial panel model, it is shown that regional tax gap is determined by tax evasion in neighbouring regions and is characterised by spatial persistence. Results make it possible to draw a taxonomy of the determinants of regional tax gap: contextual factors and operational factors linked to the relative efficacy of tax evasion contrasting policies and geography

The causal relationship between energy consumption, energy prices and economic growth in Asian developing countries: A replication

In this paper, we first replicate estimates of [6] over a longer period from 1971 to 2015. We then extend the analysis estimating an additional specification in which a categorical variable is included to take into account if the four Asian countries adopted policies in support of the generation of energy from renewable sources. Most of the results of Asafu-Adjaye's analysis hold for Thailand and Philippines even when considering 20 years of additional data. The results for India and Indonesia are quite different from the original work in term of vector of cointegration and Granger-causality relationships. The Indian case is also different from other countries considered when we analyse the effects of the adoption of policies in favour of renewable energy sources. Keywords: Energy consumption, Economic growth, Granger causality, Replication, JEL classifications: C22, Q43, Q4

New Paradigms in Banking, Financial Markets and Regulation?

On May 11-12, 2011, SUERF, the Belgian Financial Forum, the Brussels Finance Institute and the Centre for European Policy Studies (CEPS) jointly organised the 29th SUERF Colloquium New paradigms in money and finance? The papers included in this SUERF Study are based on contributions to the Colloquium. The 2008-11 financial crisis has demonstrated unsatisfactory performance in financial institutions and in financial regulation and supervision all over the world. The contributors to the present volume look with critical eyes on financial theories, supervisory structures, (mis)pricing of risk and distorted incentives, risk management models and procedures, conflicts of interest and bank strategies. Their perspectives are quite different, but they share the ambition of finding improved analytical, organizational or managerial approaches so that decisionmakers have a better chance of showing good performance in the future. In essence, they are looking for new paradigms in banking, financial markets and regulation

The Impact of Policies on Income Distribution in a Micro-Macro Perspective: the Case of Vietnam

Obiettivo di questo lavoro è studiare i fattori socio-economici responsabili del cambiamento nella distribuzione del reddito dovuto a un cambiamento nel contesto politico di riferimento, in Vietnam durante il periodo delle riforme. La metodologia adottata analizza i cambiamenti nella distribuzione del reddito sia a livello micro che a livello macro. A livello micro, l'analisi indaga sulle caratteristiche individuali e familiari da cui dipende il livello e la distribuzione della spesa. E' possibile inoltre valutare gli effetti diretti di cambiamenti nel quadro politico di riferimento. Il livello macro di analisi consente di individuare le caratteristiche strutturali della disuguaglianza nella distribuzione del reddito personale e di isolare anche gli effetti indiretti delle politiche. Gli strumenti analitici selezionati in questo studio sono un modello supply-driven, rappresentato da un modello di microsimulazione e un modello demand-driven, costituito dalla Matrice di Contabilità Sociale. In particolare, il modello di microsimulazione ha consentito la derivazione di una distribuzione controfattuale e la disaggregazione della variazione della disuguaglianza in Vietnam in: effetto di prezzo, effetto di una variazione della componente non osservata dei salari, effetto dovuto a cambiamenti nelle scelte occupazioni e effetti dovuti a cambiamenti nella popolazione. Utilizzando una nuova metodologia di scomposizione ad un livello microscopico dei moltiplicatori derivati dalla SAM, è stato possibile derivare e isolare tutti gli effetti diretti e indiretti di uno shock esogeno sulla distribuzione personale del reddito.The aim of this work is to investigate the socio-economic factors that affect in income distribution changes caused by changes in the policy framework in Vietnam during the period of reforms. The adopted methodology analyzes policy induced changes in income distribution both at the micro and the macro level. At the micro level, the analysis of inequality can help identifying the socio-economic factors affecting the level of household expenditure and its distribution and evaluating direct effects of policies. The macro level identifies the structural characteristics of inequality and evaluates also the indirect effects of policies on the personal income distribution. The two analytical tools have been selected have been a supply driven model represented by the microsimulation model and a demand driven model, constituted by the Social Accounting Matrix. The microsimulation model allowed deriving a counterfactual distribution of income and disaggregating change in the Vietnamese income inequality into four effects: price effect, effect of a change in the unobservable component of wages, occupational choice effect and population effect. Using a new technique of decomposition of SAM-based multipliers in 'microscopic' detail, the macro model allowed deriving all the direct and indirect effects of an exogenous shock to personal income distribution