The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology / Jed Friedman, James Levinsohn.

Format:

Book

Author/Creator:

Friedman, Jed.

Contributor:

National Bureau of Economic Research.

Levinsohn, James.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8564.

NBER working paper series no. w8564

Language:

English

Subjects (All):

Economic history.

Financial crises--Indonesia.

Financial crises.

Income distribution--Indonesia.

Income distribution.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Cambridge, Massachusetts : National Bureau of Economic Research, 2001.

Summary:

Analyzing the distributional impacts of economic crises is important and, unfortunately, an ever more pressing need. If policymakers are to intervene to help those most adversely impacted, then policymakers need to identify those who have been most harmed and the magnitude of that harm. Furthermore, policy responses to economic crises typically must be timely. In this paper, we develop a simple methodology to fill the order and we've applied our methodology to analyze the impact of the Indonesian economic crisis on household welfare there. Using only pre-crisis household information, we estimate the compensating variation for Indonesian households following the 1997 Asian currency crisis and then explore the results with flexible non-parametric methods. We find that virtually every household was severely impacted, although it was the urban poor that 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 we allow households to substitute towards relatively cheaper goods or not. However the geographic location of the household mattered even within urban or rural areas and household income categories. Additionally, households with young children may have suffered disproportionately adverse effects.

Notes:

Print version record

October 2001.