Strategic And General Equilibrium Models In Poverty Measurement Studies

by Bhattarai, Keshab  
Published in Romanian Journal of Economic Forecasting
, 2010, volume 13 issue 1, 137-150

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Incentive compatibility in poverty alleviation game for the most efficient and just allocation of resources and maximisation of social welfare requires cooperation from both rich and poor households, governments and the global community. Noncooperation among them only deepens poverty with socially, economically and morally unacceptable magnitudes of malnutrition, hunger-disease-illness, tensions and conflicts, illiteracy and lack of education and skills. Scientific analyses and systematic implementation of poverty reduction initiatives require strategic and multihousehold general equilibrium models to compliment standard Booth-Rowntree, Sen-Atkinson and FGT or Jenkins-Lambert type absolute, relative, chronic or intensity measures of poverty in order to evaluate dynamic impacts actions taken for alleviation of poverty. Bad game results in poverty and good game results in prosperity. No analyses of poverty can be considered complete without evaluating income and substitution effects on welfare of these households based on the price mechanism and allocation of resources in the wider economy.

Keywords: poverty, redistribution, dynamic model
JEL Classification:
D63, O15