Measuring the aggregate welfare consequences of a particular monetary stance is clearly something that central banks need to be able to do in order to make a holistic assessment of their policies. Identification is one important step in that direction, which needs to be complemented with focus group or panel tracking approaches.
The research community has made some effort in this direction; perhaps it is time to give the approach more prominence in the macroeconomic policy dashboard. The second reason for the Reserve Bank’s interest in poverty identification and measurement stems from the priority the Bank attaches to financial inclusion and literacy.