Working Paper No. 01-02-01 The Effect of Robust Growth on Poverty: A Nonlinear Analysis

Previous research has shown that economic growth should help to reduce the rate of poverty. However, a number of recent studies find that the economic expansion of the 1980’s had no statistically significant effect on aggregate poverty. We show that a Fourier approximation provides a better empirical model of poverty than the standard linear model. It is noteworthy that the nonlinear specification shows a large and significant effect of the 1980’s expansion on poverty.