ABSTRACT
This chapter provides a brief and selective overview of research on the links between macroeconomic policies and poverty reduction. It examines a survey of the literature on macroeconomic policies, macroeconomic adjustment, and poverty in the run-up to the new emphasis on participatory processes that emerged toward the end of the 1990s. The chapter gives a preliminary look at the data, and focuses on a United Nations Development Programme-developed measure of wellbeing, the Human Development Index. The literature on the relation between inflation and poverty has generally found a significant association between improvements in the well-being of the poor and lower inflation. While there is extensive research on the impact of trade liberalization on income distribution, the direct links between absolute poverty and trade reform are only beginning to be explored. World Bank summarizes country case studies showing that macroeconomic crises tend to be associated with increases in income poverty, and often with increases in inequality.
