Anti-poverty transfers and spatial prices in tunisia

Abstract EN

In this paper, the role of price deflation in estimating the impact of price subsidies and anti-poverty cash transfer schemes on poverty in Tunisia is studied.

Three types of price corrections are considered: (a) no corrections; (b) living standards deflated by spatial Laspeyres price indices; and (c) living standards deflated by true price indices that are estimated from a quadratic almost ideal demand system.

Distinguishing these corrections and using data from Tunisia, the effects of the price deflation and the demand system estimation on poverty and budget leakage estimates are analyzed.

These effects can intervene at two stages of the estimation: (a) the calculation of transfer levels for each household; and (b) the estimation of post-transfer social statistics.

Results show that price correction, whatever its form, may have only limited importance for the assessment of anti-poverty policy in Tunisia.

Correcting or not for spatial price differences, or for consumption substitution does not modify the performance ranking of the studied policies.

This is at odds with other findings in the empirical literature that price differences may be important for poverty monitoring.