Nº 86 (July, 2009). Mauricio Gallardo Altamirano.

In this paper, using cross sectional data and following the methodology proposed by Chaudhuri et al. (2002), an estimation of household vulnerability to poverty in Nicaragua is made. The household vulnerability is assessed as the probability that the expected value of the logarithm of consumption is lower than the logarithm of certain threshold of poverty. Both official and International poverty lines are considered. The estimation of the expected value and the variance of the logarithm of consumption are made by typical three-step Feasible Generalized Least Squares procedure suggested by Amemiya (1977). The results validate the importance of some determinants of vulnerability that have been studied for other countries. Considering a household as potentially poor, when its vulnerability is more than 0.5, it is found that in Nicaragua the potential poverty headcounts ratios are similar to the effective poverty headcount ratios.

JEL Code: I32