Poverty headcount ratio
Npoor = Sum of the distribution of consumption of Individuals below the poverty line
Poverty gap index
1. Poverty headcount ratio x ((poverty threshold - Mittelwert der Reihe)/poverty threshold)
2. Index = Summe Poverty Gaps / N
Difference poverty headcount ratio und poverty gap index
The poverty headcount ratio describes the proportion of the population below the poverty line, which is a monetary threshold under which an individual is considered to be living in poverty.
Instead the poverty gap index is a measure of the intensity of poverty.
The Problem of using market exchange rates for GDP calculation in international comparison. Why are PPP exchange rates used?
PPP exchange rates enable a better way to compare income across countries. They are defined so that the same basket of goods in any two countries has the same dollar value. Unlike market exchange rates, PPP rates take into account nontradable goods and services. Services are usually much cheaper in poorer countries.
The Human Development Index (HDI) was constructed to provide an indicator of development, that does not merely focus on income. How is HDI calculated?
The human development index (HDI) is calculated by the life expectancy index, which is described by the life expectancy at birth, the education index, which results of the mean years of schooling and the expected years of schooling and the GNI index, which describes the gross national income per capita
Explain the idea of development gaps and list two common examples
The development gap describes the difference in standard of living between the world’s richest and poorest countries. Differences can be measured in terms of income, life expectancy, health, education and level of urbanization. The development gap envolves over time. Currently, it is decreasing for some countries, like China and India, while increasing for others, like the democratic Republic Congo or Venezuela. Economic development is not irreversible. Some rich economies have displayed protracted decline. Poor economies tend to grow faster when they grow, but growth is less stable and often regresses.
Lorenz curve
A country is more unequal, if the area between the diagonal and the lorenz curve is bigger than the other country
Gini coefficient
Gx = (0,5 - area below the diagonal) x 2
shows how unequal a country is, for example a gini coefficient of 0 would mean that the country would be a fully euqal income distribution
What is the effect of Income Gini on growth, according to the results presented?
A negative correlation can be observed for all known significant Income Ginies except for (3). The income ginie has a negative impact on economic growth per year. This can be deducted from the negative significance level of the income ginie coeffcients
Which one of the two inequality measures (Income Gini or Land Gini) may be more important for explaining growth differences between countries? Could multicollinearity play a role?
The Land Gini is more important because of its significance. Moreover, instead of the Income gini, it shows higher values and thus has a stronger negative influence. Multicollinearity could be present since the Income Ginie was significant in (1), (2) and (4) and no longer shows significance when the Land Gini is added to the model
A model of the impact of redistributional conflicts on growth was discussed in the lecture. How can growth be impacted by such conflict? Is there any evidence in the data?
With reference to the table 3, growth decreases as GDP increases due to the redistribution of private tax revenues. Accordingly, it can be inferred that GDP has a negative impact on the country’s economic growth
Is there Income convergence between the countries in the sample?
It is noticeable that a higher growth constants the negative influence of GDP on economic growth is stronger
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