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The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A 'Rapid Response' Methodology Author info | Abstract | Publisher info | Download info | Related research | Statistics Jed Friedman (RAND Corporation)
James Levinsohn (University of Michigan)
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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.
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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number
482.
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Length: 33 Pages
Date of creation: 2001Date of revision:
Handle: RePEc:mie:wpaper:482Contact details of provider: Postal: ANN ARBOR MICHIGAN 48109 Web page: http://www.fordschool.umich.edu/rsie/ More information through EDIRC
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Full
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