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What is the welfare effect of a price change? This simple question is one of the most relevant and controversial questions in microeconomic theory and its different answers can lead to severe heterogeneity in empirical results. This paper returns to this question with the objective of providing a general framework for the use of theoretical contributions in empirical works, with a particular focus on poor people and poor countries. Welfare measures (such as Equivalent Variation or Consumer's Surplus) and computational methods (such as Taylor's approximations or the Vartia method) are compared to test how these choices result in different welfare measurement under different price shock scenarios. As a rule of thumb and irrespective of parameter choices, welfare measures converge to approximately the same result for price changes below 10 percent. Above this threshold, these measures start to diverge significantly. Budget shares play an important role in explaining such divergence, whereas the choice of demand system has a minor role. Under standard utility assumptions, the Laspeyers and Paasche variations are always the outer bounds of welfare estimates and consumer surplus is always the median estimate. The paper also introduces a new simple welfare approximation, clarifies the relation between Taylor's approximations and the income and substitution effects, and provides an example for treating nonlinear pricing. Stata codes for all computations are provided in annex.

Access to Markets --- Agriculture --- Choice --- Consumer Demand --- Consumer Preferences --- Consumer Surplus --- Consumers --- Consumption --- Cost of Living --- Data --- Demand --- Demand Curves --- Demand Function --- Developing Countries --- Distribution --- E-Business --- Econometrics --- Economic Research --- Economic Theory & Research --- Economics Literature --- Elasticity --- Electricity --- Emerging Markets --- Engel Curve --- Equity --- Exchange --- Expenditure --- Food Price --- Free Market --- Government Revenues --- Income --- Income Effects --- Index Numbers --- Information --- Interest --- International Economics & Trade --- Lorenz Curve --- Macroeconomics and Economic Growth --- Market Prices --- Markets & Market Access --- Money --- Nominal Income --- Normal Good --- Open Access --- Outputs --- Particular Country --- PC --- Price --- Price Adjustments --- Price Change --- Price Decreases --- Price Elasticity --- Price Increases --- Price Schedule --- Price Structure --- Price Variation --- Price_Index --- Pricing --- Private Sector Development --- Product --- Productivity --- Real Income --- Reliability --- Results --- Sales --- Savings --- Subsidies --- Substitute --- Substitute Goods --- Substitution --- Surplus --- Tax --- Tax Systems --- Transactions --- Utility --- Utility Function --- Utility Maximization --- Value --- Variables --- Wages --- Web --- Welfare --- Welfare Economics

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In Monetary Policy, leading monetary economists discuss applied aspects of monetary policy and offer practical new research on the timing, magnitude, and channels of central banking actions. Some of the papers in this volume evaluate a variety of policy rules based on monetary aggregates, nominal income, commodity prices, and other economic variables. Others analyze price behavior and inflation, particularly the short-run behavior of prices. Still others examine the monetary transmission mechanism-the channel through which the central bank's actions affect spending on goods and services-with a special focus on the reduction in bank lending that must accompany a reduction in reserves. This new research will be of special interest to central bankers and academic economists.

Monetary policy --- Politique monétaire --- Congresses --- Congrès --- Politique monétaire --- Congrès --- -politique monetaire --- 333.111.6 --- Betrekkingen van de centrale banken met de overheid. Voorschotten aan de overheid. Monetaire financiering van de schatkist. --- Monetary policy -- United States -- Congresses. --- Monetary policy -- United States. --- Monetary policy. --- Finance --- Business & Economics --- Money --- 332.4973 --- eua --- politique monetaire --- 333.111.0 --- 333.80 --- 333.820 --- 333.825 --- 333.846.0 --- AA / International- internationaal --- 336.74 --- 336.74 Geld. Geldwezen. Monetaire sector. --- Geld. Geldwezen. Monetaire sector. --- vsa --- monetair beleid --- Algemeenheden. Theoretische en beschrijvende studies. Centrale banken --- Betrekkingen van de centrale banken met de overheid. Voorschotten aan de overheid. Monetaire financiering van de schatkist --- Geld-, bank- en kredietpolitiek. Kapitaalmarkt en -rente: algemeenheden --- Geldbeleid, bankbeleid en kredietbeleid: algemeenheden --- Deviezenpolitiek. Interventies --- Verband tussen het monetair, bank- en kredietbeleid en de economische ontwikkeling: algemeenheden --- Geld. Geldwezen. Monetaire sector --- Money. Monetary policy --- E-books --- Congresses. --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Monetary policy - United States - Congresses --- central banking, monetary policy, commodity prices, nominal income, aggregates, inflation, price behavior, transmission, spending, bank lending, economics, nonfiction, finance, gdp, regression, forecasting, sacrifice ratio, federal reserve, business cycles, currency, employment, exchange rates, saving, labor, investment, dollar.