世界银行 -通货膨胀如何侵蚀现金转移以及如何应对 Keep the Pace - How Inflation Erodes Cash Transfers and What to Do About it

PublicDisclosureAuthorizedPublicDisclosureAuthorizedPublicDisclosureAuthorizedPublicDisclosureAuthorized

NOVEMBER2024

KEEP

THEPACE

HowInflationErodesCashTransfers

And

WhattoDoAboutIt

UgoGentilini,HrishikeshTMMIyengarandGiorgiaValleriani

withSherazAziz,HanaRakhmaArimbi,JusaineLisMirandaNogueira,

MaríaAngélicaTrujillo,andCalvinCheng

01—INTRODUCTIONKEEPTHEPACE

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TABLEOFCONTENTS

1/INTRODUCTION6

2/THECASEFORANDAGAINST(AUTOMATIC)INDEXATION11

3/RESULTSFROMGLOBAL

INDEXATIONDATABASE15

Methodofindexation15

Institutionalarrangements25

Frequencyandtiming26

4/EVOLUTIONANDADAPTATIONS30

Fromdiscretionarytoautomaticindexation31

Argentina/31

Australia’ssocialpensions/33

Ghana:areal-timeshift/35

Changeinmethod:fromautomatictodiscretionaryindexation38

Maldives:from“conditionalautomation”todiscretionaryindexing/38

Nocorrection39

Uruguay’ssteadycourse/39

Hybrid41

Norway:indexationplusdiscretionarytop-up/41

Mexico’s“unspecifiedautomatic”model/42

Changeinfrequency(withinautomaticindexation)45

Italy:frommoretolessfrequentindexation/45

Canada:fromlesstomorefrequentindexation/48

Changeinmechanism:frompricestowages49

NewZealand/49

Mixingwagesandprices52

Germany’ssupplementaryindexation/52

Changewithinprices52

Belgium’shealthindex/52

5/STYLIZEDFRAMEWORK54

6/CONCLUSIONS59

REFERENCES62

ANEXX1/TAXONOMYOFINDICES7

6

ANEXX2/PROGRAMLEVELINFOONKEYFEATURESOFBENEFIT

ADJUSTMENTS7

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ACKNOWLEDGMENTS

ThisreportwasmadepossiblebythegeneroussupportoftheWorldBank’sRapidSocialRe-sponseAdaptiveandDynamicSocialProtection(RSR-ADSP)UmbrellaTrustFundProgram,whichissupportedbytheRussianFederation,UnitedKingdom,Norway,Sweden,Australia,Denmark,theBillandMelindaGatesFoundation,USAID,GHRFoundationandUBSOptimusFoundation.

Sincerethanksgotoseveralcolleaguesfortheirsupportthroughoutthereport’sproductionpro-cess.TheteamisgratefultoJameleRigoliniandLoliArribas-Banosfortheirstrategicguid-ance;JosefinaPosadas,RuslanYemtsov,andZainebMajokaprovidedpreciouspeerreviewcomments;AlessandraMarini,ClementeAvila,CorneliaTesliuc,DewenWang,FedericaRical-di,FrancescoCenedese,KeniaParsons,Ludivi-caCherchi,ManuelSalazar,MohamedAlmenfi,NahlaZeitoun,PaoloBelli,TiagoFalcaoSilvaandWilliamWisemanwereexceptionalinsup-

plying,validatingorclarifyinginformationonselectcountries;andthereflectionsbyColinAndrews,MarcoKnowlesandHerwigImmervollsharedataseminarheldattheWorldBankweremuchappreciated.Finally,specialthanksgotoNickBarratLSEforearlydiscussionsonideasdevelopedinthepaper.

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EXECUTIVESUMMARY

Theindexationofbenefits,oranchoringcashtransferstoinflationlevels,rep-resentsakeyandunderexploreddimensionoftheadaptivesocialprotection(ASP)agenda.Whileconsiderableattentionhasbeenpaidtocoverageex-pansionasacorefunctionofASP,thisreportarguesthatindexationcanbefruitfullyframedasanovelfeatureofmakingsocialprotectionsystemsmoreadaptive.Throughindexation,theadequacyofcashtransferscanevolve–or“keepthepace”–withchangingconditions.ThisreportappliesanASPframeworktosupportpolicymakersinnavigatingtrade-offsinindexation,includingpresentingnewdataandexperiencestoinformwhetherandhowindexationcouldbecalibratedindifferentcontexts.

Theadjustmentofcashtransferstoinflationismoreprevalentthanoftenassumed,butitisoftendiscretionary.Thisreportoffersanovelstockta-kingcomprisingof232non-contributorycashtransferprogramsacross158countries.Theseprograms,whichencompassunconditionalcashtransfers,conditionalcashtransfers,publicworks,andsocialpensions,aretrackedusing16indicatorsforatotalof7,056datapoints.Almostfour-fifthofthesurveyedprogramshavesomeformofdiscretionaryorautomaticindexation,withaboutone-thirdofthemdoingsothroughautomaticadjustments.

Countrieshavedynamicallyevolvedtheirapproachtoindexationsignificant-ly.Thereport’s14deepdivesintospecificcountrypracticesdocumentthatindexationpracticeshavealsoevolvedremarkablyovertime,includingintermsofalteringmethods,mechanisms,andfrequencyofindexation.Whileindexationisnearlyastandardfeatureinhigher-incomecontexts,arichsetofexperiencesisemergingacrosstheincomespectrum,includingsalientreal-timedevelopmentsinlowerincomecontexts.

Differenttypesofindexationpresentcomparativestrengthsandlimitations.Asystemthatadjuststransfersdiscretionarilymayhavemorecontroloverfiscalcosts;butitalsoplacesthosedecisionsonpotentiallylesspredict-ableandobjective–indeeddiscretionary–decisionmakingprocesses.The

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politicsoftransferaugmentationisgreatlyreduced,butnoteliminated,byautomaticindexation;thepredictabilityofautomaticbenefitsyieldssizablebenefits,butthemechanicsofconstructingindexationmeasuresalsorais-esasetofdataandtechnicalchallenges.Incasesofskyrocketinginflation,thebalancebetweenmaintainingpurchasingpowerandfiscalsustainabilityshouldalsobecarefullypondered.Infact,theappropriatenessofdiscretion-ary,automaticandhybridindexationmodalitiesvarybycontext,withthelevelofmaturityinASPsystemsandprevailingrateofinflationshapingtheirvia-bility,effectivenessandefficiencysignificantly.

Arichoperationalagendaliesahead.Thisincludestailoringtheoverallpa-rametersforindexation(whetherautomaticordiscretionary),theappropriateselectionofbenchmarkmechanismsbetweenprice,wage,orcombinationsthereof,andthecustomizationofindexationtospecificcashtransferde-signs.Furthermore,ironingoutthethresholdsandconditionsunderwhichindexationmechanisms,methodsandparametersshouldchangerepresentsanimportantareaofinnovation.Thepracticesandcasestudiesdistillinginthisreportrepresentaninitialstepinsuchdirection.

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1/INTRODUCTION

Foodpricesaregrowingsteadily.Aroundmid-2024,atleasttencountriesdisplayedanannualnominalfoodinflationofover40%,andinthreeofthemitexceeded100%.InArgentina,theratewas293%.Anduptotwo-thirdsofmiddle-incomecountrieshadinflationhigherthan5%(WorldBank2024).Whileinflationcanbeattributedtostructuralandidiosyncraticforces,long-termtimeseriesshowthatfoodprices,asmeasuredbytheFoodPriceIn-dex1,havebeenclimbingsteadilyoverthepastquartercentury:realfoodpricesin2024areaboutone-fifthhigherthanthepreviousdecadeanddou-bletheleveloftheprecedingtwodecades(figure1).

Figure1/TrendsinFoodPriceIndex,1990-2024(2014-16=100)

140

120

100

80

60

40

20

0

2000200120022003200420052006200720082009201020112012201320142015201620172018201920202021202220232024

NominalReal

Source:FAOSTAT,accessedSeptember2024Linear(Real)----

Inflationisgenerallydetrimentalforeconomiesandsocieties,althoughsomemaybenefitfromit.Inthecaseoffoodinflation,anumberoffactorscanaffectthedirectionanddepthofimpactacrosssociety.Forinstance,intheshort-term,netfoodconsumerswouldbehurtbypriceincreases.Suchimpactwouldhingeontheleveloftradeandmarketintegration,

1|TheFAOFoodPriceIndexconsistsoftheaverageoffivecommoditygrouppriceindices(cereals,vegetableoil,dairy,meat,andsugar)weightedbytheaverageexportsharesofeachofgroupover2014-2016(see

/

worldfoodsituation/foodpricesindex/en/)

01—INTRODUCTIONKEEPTHEPACE

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whichaffectthedegreeofpricesignalstransmissionbetweennationsandwithincountries;themarketstructureandelasticityofsupplyresponsewouldmattertoo,includingthecostandtimeofadjustmenttochangingpricesignalsbyvariousactorsalongsupplychains.Inthemedium-term,however,itispossiblethathigherfoodpriceswouldincentivizeagricul-tural,farm,off-farmandnon-farmruralsectorsformoremarketproduc-tionandtransactions.Anaugmentedfoodsupplymay,inturn,reducepricesforconsumers(ofcourse,assumingthattherearenohoardingorspeculativepracticesbyproducers,wholesalers,intermediariesorretail-ers).Moreover,thosepricedynamicswouldbeaffectedbywhathappenselsewhereintheeconomy,suchasinlabormarketsandsocialprotec-tion–bothofwhichcanaffecteffectivedemandandfoodentitlements2.

Theinflationdebateencompassesbroaderfiscalpolicyissues.Ininfla-tionarysettings,understandingtherelationshipbetweenmonetaryandfiscalinteractionsiskey.Insomecases,thelinesbetweenthetwoareblur-ring:forexample,theuseofone-offinjectionsofuniversalcashtransfers incasesoflowinterestratesanddemandcontractionshasbeendubbed“unconventional”monetarypolicy3.Ascentralbanksconsiderhowtoad-dresshighinflationlevels(viamonetarypolicy)andgovernmentsstrivetomitigatetheirnegativewelfareeffects(viafiscalpolicy),itisimportanttoensurethatthetwoleversoperatewithinacoherentpolicyframework4.

Highfoodpricescanhaveregressiveeffects.Withthepoorestsectionsofthepopulationdevotinghighersharesoftheirbudgetsforfoodexpendi-tures,highfoodpricescanhavecatastrophicconsequences.Theright-handoffigure2showssuchnegativeincome-foodexpendituresrelation-ship–the“EngelLaw”–forRwanda.TheLawislikelytoimpacthumancapitalvialessnutritionandpotentiallyreducedinvestmentsinhumancapital,bothofwhichcanhavedetrimentaleffectsforlong-termwelfare.Thiseffectiscapturedintherighthandoffigure2.

2—SeetheclassicworkbySen(1981),Timmeretal(1983)andDevereux(1988).

3—SeeGentilini(2022)

4—SeeforexampleGitaGopinath’sintroductoryremarksfortheConference“FiscalPolicyinanEraofHighDebt”,November17,2023:

/en/News/Articles/2023/11/17/sp-fdmd-gopinath-remarks-at-fiscal-forum

-era-of-high-debt

8

01—INTRODUCTIONKEEPTHEPACE

Figure2/Shareofhouseholdfoodexpendituresoutoftotalincome

Foodbudgetshare

10

8

6

4

2

1012141618

logtotalexpenditure

Source:Nsabimanaetal(2020)

Therelationshipbetweencashtransfersandinflationisdebatedempir-ically.Cashtransfersareusedtomeethighprice-inducedneeds:forin-stance,in2023atleast145millionpeoplewerereachedbyinflation-re-latedcashtransfersin17countries5.Whileevidencegenerallysuggeststhatcashtransfersthemselvesdon’tdrivepricesup,thiscanbethecaseunderspecificwheremarketstructures6.Suchriskofaugmentinginfla-tion–oratleastnotbeingabletokeepupwithit–canleadpeopletopreferin-kindassistance,suchasreportedinIndia,EgyptandEthiopia7Attheheartofthedebateliesthedefinitionandmeasurementofmar-ketfunctionality.Whethercashtransfermayamplifyinflationaryeffectshingesonmarketstructure:wheretheelasticityofsupplyrespons-esislow–becauseofstructuralbottlenecksinterferingpricesignals(e.g.,limitedtransportinfrastructure)ormarketactors’strategicbe-havior–asignificantinjectionofcashmayresultinhigherprices.Con-versely,incontextswithanaveragedegreeofmarketfunctionalityinplace,cashtransfersareunlikelytogeneratemajor,sustainedsurgeinpricesbecauseofsupplyresponsestoincreasedeffectivedemand8.Inflationmovesthedefinitionandcalibrationoftransfers’“adequacy”

5—Gentilinietal(2023)

6—Gentilini(2024),AllenandGentilini(forthcoming)

7—SeeforexampleGentilini(2023).

8—Foradiscussionontheeffectsofcashtransfersoninflation,seeAllenetal(2024)andGentilini(2024)“BalancingAct:NavigatingtheIn-KindvsCashTransfersDebate”,keynotespeechattheInstituteofNationalPlanning,Cairo(recordingsavailableat

/share/v/GxqXHoZ6WavkZQbv/?mibextid=WC7FNe

).

SouthAfrica(AllisonandPillay2024:decreasebydesign(forchildgrant,notothergrants,andpossibleitems)

01—INTRODUCTIONKEEPTHEPACE

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centerstage.Trade-offsbetweencoverage,adequacy,costs,andincen-tiveshavebeenrecognized.Ascountriesembarkonajourneytowardsen-hancedsocialprotectionprovisions,thetravelcanbefilledwithdifficultchoicesandchallenges.Policymakerssituatechoicesaroundadequacywithinbroaderconsiderationsoncoverage,incidence,incentives,fiscalcosts,andpoliticaleconomy.Specifically,whatconstitutesan“adequate”transfer,thatis,howmuchshouldbeneficiariesideallyreceive?Overall,transfershingeonprogramobjectives:forexample,ifthegoalistoensurea“healthydiet”,theaveragecostofitisestimatedas$3.2-$3.76/day;someprogramsestimatethecostofaccessing“minimumexpenditurebaskets”;programscanalsoanchortransferstothepovertyline(e.g.,providinganequivalentof20%ofit)ortotheminimumorprevailingwage(inthecaseofpublicworks,forinstance);transferscanalsodifferifaprogramisframedasoffsettingopportunitycosts(e.g.,avoidingchildlabor),ifitaccountsfortransactioncostsincurredbybeneficiaries(e.g.,transportation),orifmeanttosimplyoffera“reimbursement”(likeinthecaseofsometrain-ings).Furthermore,ifaschemehasgoalsotherthanfoodsecurity–forexample,relatedtoassets(likelivestock),rentalassistanceoradherenceestablishedlegalrights–thecorrespondingamountcanbecommensu-ratetothose(likelyhigher)spendingrationales.

Theremightbeadifferencebetweenplannedandactualamountsoftrans-fersthatpeoplereceive.Afteraprogram’sobjectivehasbeendefinedandtransferscalibratedaccordingly,arangeofcircumstancescanleadtolowerprovisions(figure3).Forinstance,societalandpoliticalattitudestowardsthenotionof“deservingness”maypreventsomepeopleinneedtoreceivingcashassistance(e.g.,workingagepopulationsinthelabormarketearninglowwages).Fundingshortfallsmayallowtocoverasubsetofeligiblepar-ticipantsandplaceothersinwaitinglists.Deliverybottlenecks,likelimitedreachofIDorpaymentsystems,andhightransactioncostsforbeneficiaries,suchastraveltimeorexcessivedocumentationrequirements,canfurtherstymieparticipation.Peoplemayincurincostsforaccessingbenefits,likefortransportation.Andfinally,thepurchasingpowerofcashtransferscanbeerodedandevenwipedoutbyinflation.Thedifferencebetweenplannedandactualtransferscanhaveprofoundeffectsonprogramperformance.

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01—INTRODUCTIONKEEPTHEPACE

Figure3/Stylizedfactorshinderingcashtransfersdesign

Objetives

Societalattitudes

Funding

Delivery

Beneficiary

transaction

costs

Purchasing

erosion

power

Source:authors,adaptedfromOECD(2024)

Indexationcanbeinterpretedasanactofrealignment(“keepingthepace”)betweeninflationandtransfersize.Theformerchangescontinuously,whilethelatterisoftenadjustedmoresporadicallyandunpredictably,ifatall.Whilesomecomponentsofsocialprotectionsystemshavebeenan-choredtoinflation:forexample,thereisacentury-longtraditionwithcon-tributorypensionsindexation,withDenmark’sseminalmeasuresin1933.Yet,indexationinsocialassistancehasbeenlessprevalent.Thecorechallengetackledbythereportistounderstandwhethertoconsidercashtransfersindexation,thepracticalwaystodoit,howthesemayevolve,andthetrade-offsinvolvedintheindexationprocess.

Thereporthelpsfillingalongstandinggapbyofferinganovelstocktak-ingcomprising232non-contributorycashtransferprogramsacross158countries.Theseprograms,whichencompassunconditionalcashtransfers,conditionalcashtransfers,publicworks,andsocialpen-sions,aretrackedusing12indicatorsforatotalof7,056datapoints.Afullexceldatabaseaccompaniesthisreport,alongsideasetof14shortcasestudiesprovidingmoregranularityintocountrypractices9.

Thereportisstructuredasfollows.Thenextsectionsketchesouttheben-efitsandlimitationsofindexation;section3offersanoverviewoffindingsfromourglobalstocktaking;section4illustratesselectprogramtrajecto-riesinindexationchoicesovertime;section5setsoutastylizedframe-workforindexationchoices,whilesection6concludes.

9—TheseincludeArgentina,Australia,Belgium,Brazil,Canada,Chile,Germany,India,Italy,Maldives,Mexico,NewZealand,NorwayandUruguay.

02—THECASEFORANDAGAINSTAUTOMATICINDEXATIONKEEPTHEPACE

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2/THECASEFORANDAGAINST(AUTOMATIC)INDEXATION

Indexationtobenefitscanbeundertakenonadiscretionaryorautoma-ticbasis.Intheformercase,policymakersundertakead-hoclegislativeactionthatdefinesthemodalityandlevelofadjustment.Inaddition,thegovernmentcanalsodecidewhetherandwhentomakesuchdiscretion-aryadjustments.Inthecaseofautomaticadjustments,benefitsareupra-tedbasedonplanned,predefinedrules(e.g.,benchmarkmechanism)andfrequency.Byprovidingregularandtransparentadjustments,uncertaintysurroundingthebenefitamount–andlossesofpurchasingpower–arelikelyreduced.Yetbothoptionspresenttechnicalandpoliticaleconomyadvantagesanddrawbacks.

Anchoringbenefitsonpredefinedtriggersthatadjustthesizeofcashtransfersautomaticallyinvolvescomplexconsiderations.Thecaseforau-tomaticindexationrestsonmaintainingprogrameffectiveness,coordina-tionwithcontributoryarmsofthesocialprotectionsystem,thereductionin“hiddencosts”bornbybeneficiarieswhenbenefitsarenotadjusted,andasetofqualitativeconsiderationsaroundtransparencyandpredictability.Drawbacksmayincludethepossibleexplicithighcostinhighinflation-arycontexts,technicaldifficultiesrelatedtocalibratingandbenchmarkingbenefits,and,fromapolicymakerperspective,perhapslessroomfor(butnotabsenceof)flexibleandidiosyncraticchanges.

Inflationcanhaveacorrosiveeffectontheabilityofcashtransferstoat-taintheirstatedgoals.Someexamplescanillustratethelatterpoint.InBrazil,thesizeofcashtransfersundertheflagshipBolsaFamiliapro-gramhasincreasedsteadilyovertime.WhileBrazilhasnoautomaticad-justment,between2003and2020benefitswereincreasedseventimesdiscretionarily.Forafamilyoftwoadultsandtwochildrenlivinginex-tremepoverty,nominalbenefitvaluesdoubledfrom$16to$34(figure4,leftgraph).10Thesamegraphindicatesawideninggulfbetweengrowth

10—DuringtheCOVID-19period(2020-21),thegovernmenthadimplementedtwoadditionalprograms,AuxílioEmergencialandAuxílioBrasil.Andimmediatelyafterthepandemic,thegovernmentintroducedanewprogram(calledNewBolsaFamilia).ThebenefitamountsintheseschemeswereconsiderablyhigherthanthoseunderthetraditionalBolsaFamilia.Someestimatessuggestthatpostpandemicbenefitlevelshavebeenalmost300%higherthanpre-pan-demictransfers.

02—THECASEFORANDAGAINSTAUTOMATICINDEXATIONKEEPTHEPACE

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intheminimumwageandBolsabenefits.Consideringthegeneralin-

flationindex(INPC)andfoodinflationindex(INPC-food),andthemin-imumwage(MTE12_SALMIN12),in2021therealvalueofBolsabenefitswasreducedbyabout22%,33%,and60%,respectively(Figure4,rightgraph).Similarly,therehasbeenawideninggulfbetweenactualandhy-potheticallyindexedbenefitsinChile’sEthicalFamilyIncomeprogram:suchgappeakedin2020,whenthedifferenceamountedtoaround23%11.

Figure4/Gapbetweenactualandinflation-indexedbenefitsinBrazil

Averagebenefit($)

90

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40

30

20

10

0

85,7

4

3,8

3

4,2

2003200520072009201120132015201720192021

Valuereceived

Valueadjustedwithinflation(INPC)Valueadjustedforminwage

%gapofactualbenefitsvsinflation-adjustedbenefits

10

-15

-40

-65

-11

\

-33

-60

2003200520072009201120132015201720192021

%gapBenefit(INPC)%gapBenefit(INPCFOOD)Valueadjustedforminwage

Source:authorsbasedondatafromvariousgovernmentofficialmaterials(seereferences)

Inothercases,anautomaticindexationwasincorporatedinprogramde-signandactedasanembeddedinflationshield.India’sMahatmaGandhiNationalRuralEmploymentGuaranteeAct(NREGA)isacaseinpoint.Theschemeisalarge-scalepublicworksprogramthatcoveredabout61mil-lionpeoplein2022-23.Whenintroducedin2011,NREGAwasanchoredonlinkedtotheConsumerPriceIndexforAgriculturalLabour(“CPI-AL”).Th