THE WORLD BANK ECONOMIC REVIEW, VOL. 16, NO. 3, 397-423
© 2002 International Bank for Reconstruction and Development / The World Bank
The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology
Jed Friedman is Associate Economist with the RAND Corporation, Santa Monica, California. His e-mail address is jedf{at}rand.org.
James Levinsohn is a Professor at the Ford School of Public Policy and the Department of Economics at the University of Michigan, Ann Arbor, and a Research Associate of the National Bureau of Economic Research. His e-mail address is jamesl{at}umich.edu.
Abstract
Analyzing the distributional impacts of economic crises is an ever more pressing need. If policymakers are to intervene to help those most adversely affected, they need to identify those who have been hurt most and estimate the magnitude of the harm they have suffered. They must also respond in a timely manner. This article develops a simple methodology for measuring these effects and applies it to analyze the impact of the Indonesian economic crisis on household welfare. Using only pre-crisis household information, it estimates the compensating variation for Indonesian households following the 1997 Asian currency crisis and then explores the results with flexible nonparametric methods. It finds that virtually every household was severely affected, although the urban poor fared the worst. The ability of poor rural households to produce food mitigated the worst consequences of the high inflation. The distributional consequences are the same whether or not households are permitted to substitute toward relatively cheaper goods. The geographic location of the household matters even within urban or rural areas and household income categories. Households with young children may have suffered disproportionately large adverse effects.
CiteULike 
Connotea 
Del.icio.us What's this?
This article has been cited by other articles:
|
|
 |
|
  J. Friedman and D. Thomas Psychological Health Before, During, and After an Economic Crisis: Results from Indonesia, 1993-2000 World Bank Econ. Rev., January 1, 2009; 23(1): 57 - 76. [Abstract] [Full Text] [PDF]
|
|
|
|
 |
|
 R. Sparrow Targeting the poor in times of crisis: the Indonesian health card Health Policy Plan., May 1, 2008; 23(3): 188 - 199. [Abstract] [Full Text] [PDF]
|
|
|
|
 |
|
 A. F. Aysan Exchange Rates, Stabilisation Policy and Redistribution of Income Margin: The Journal of Applied Economic Research, July 1, 2007; 1(3): 267 - 298. [Abstract] [PDF]
|
|