Inflation and AUH
So, I wanted to enter the debate so far is implemented in our country.
Anyway, the BEA has some mechanisms that will carry you to certain issues that, in order to build well you think it is necessary to write a full post.
In post comments Luciano Cohan opened a debate in front of me and is interested in continuing the impact of inflation on poverty and destitution.
Of course, this analysis must necessarily be done roughly by problems caused by the lack of credibility of the INDEC and besides, I will add some additional simplifications for ease of exposition.
Before I noted that one of the biggest mistakes people make when analyzing the impact of the AUH (which can be applied to the case of the moratorium pension) and that is the income from = 0 of the people who started to receive it.
So, say for example.:
"If you had $ 0 and now you have $ 220, as high inflation can be detrimental to the beneficiary?"
When we measure the variation from zero income to any other positive number, the variation can be seen as an increase of 100%?. The problem is that regardless of how much this would be the new amount.
addition, as an income of zero deflate any rate, is zero, the problem is trivial and defenders seem inflationary redistribution be right.
if you think about a little more, we realize that a more realistic assumption is that nominal income any family is necessarily greater than zero. But equally, if we continue to hold that it was zero, which I would argue is that by price increases of consumer goods, the income gap that the family would need to acquire certain basket, every time is greater . So not the same inflation for someone who has an income of 0, because if you get a handle ever afford to buy less.
was thinking pose a series of hypothetical scenarios, when I found this very good laburo Diego Born, working on the basis of data from the EPH, and used to update the basic basket Total and Basic Food Basket, INDEC CPI until the intervention of 2007 and since then the CPI BACity.
One of the observations made by the author that, in line with what posteábamos here, the bulk of the improvement in reduction of the gap between rich and poor over the Kirchner government was between 2004 and 2005.
Analyzing the gap between the 1st quintile of poorest and richest 1st, the cited author says: " The decrease strongest recorded between 2004 and 2005, when the gap goes from 20.2 to 14.8 times (this abrupt drop is due in large part, to the decrease in the number of people living in households with no income, which rose from 3.5% in 2004 to be below 1% in the remaining years). Then, the fall was a more mild to the second quarter of 2008 (11.9 times), with a slight increase in the second quarter of 2009 (12.5 times). "
to end Lavagna November 2005 he served as Minister of Economy of Argentina. Debt relief and reduction of gap between richer and the poor seem to have been characteristic of his administration. And judging by the data provided by the cited work, many are leaner later results.
addition, I would like to make constructive criticism to the work on income distribution: look at the evolution real income among the various deciles do not have much relevance.
In deciles of the population most vulnerable, the impact of inflation (using the index you want) you can leave directly below the line poverty or extreme poverty (measured by monetary income). This is purely theoretical, say. I do not think that a family gets $ 100 dollars more than necessary to avoid falling into poverty, according to the criteria and measurement handling, stop being poor.
However, what is truth is that by assigning a poor family the AUH, their incomes are increased by a large proportion. But considering who may be unemployed or working in black, their previous earnings to AUH are totally eroded by inflation and less than the sum of all child allowances received a family exceeds the rate of inflation for the period multiplied by the income (AUH) thereof, they will be disadvantaged in terms of purchasing power.
Suppose a flia. Had an income of $ 500 before the AUH and observed annual inflation rate of 20% (assuming a monthly rate equivalent to 1.5% *). AUH With $ 180 for 2 children (say, given all the same month, for simplicity) then went to monthly family income increased by 73% and become $ 860.
long would it take in this case, inflation to eat the AUH? Approx. 37 months.
The outcome depends on the initial situation and the inflation rate to consider. As the AUH is a fixed sum regardless of the income of flias. Qualifying for the lower income who started (as is the case of those who were below the poverty line), the impact of the AUH causes a substantial increase in household income and hence inflation, is higher than takes longer to eliminate or reverse the positive impact.
4 cases are presented: Household Income before AUH $ 500, $ 1000, $ 1500 and $ 2000.
have to make an aggravating factor is that the Food and Beverage recently raised their prices at rates higher than the rest of the basket, so that lower-income family could deflate their cash income by a rate higher inflation (this will leave aside at this time).
As stated above, for the first family, the additional income given the conditions AUH provided, it would take about 37 months be reversed as a result of inflation
For the other three cases, the times are shortened and become 21 months (for incomes of $ 1000), 15 months ($ 1500) and only 12 months for those with incomes of $ 2000 before AUH.
is true that we are not taking into account any adjustments that may have income, but it also seems reasonable to assume (contrary to what official statistics say) that the most disadvantaged face greater difficulties in obtaining improvements in them.
I hope that this would become clearer the point that I referred to there is to see who would take out to give to the poor people.
think Unless all families by 2009 living on $ 2000 per month were rich?
Yeah, yeah, I know that AUH was increased to $ 220, but everyone knows that if instead of putting $ 2000, put $ 2500 and instead of 20% of inflation, we put 30%, the results are less encouraging ...
Generalizing, we can say given a monthly inflation rate equivalent to the annual rate would be observed in the case of "normalcy" of government statistics, the period (t) from which offset the benefit of the AUH for inflation and after this worsen income at constant prices of the family is given by:
Well, now you can play around with the numbers and not talk so much in
air ...
Greetings,
MI
* Monthly Rate shall be calculated as:
