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The evolution of poverty during the crisis in Indonesia, 1996-99


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  • Pritchett, Lant
  • Suryahadi, Asep
  • Sumarto, Sudarno
  • Suharso, Yusuf


Poverty is intrinsically a complex social construct, and even when it is narrowly defined by a deficit of consumption spending, many thorny issues arise in setting an appropriate"poverty line". The authors limit themselves to examining how poverty - defined on a consistent, welfare-comparable basis - changed in Indonesia during a series of crises that began in august 1997. Using various data sets and studies, they develop a consistent series on poverty's evolution from February 1996 to August 1999. Specifically, they study the appropriate method for comparing changes in poverty between the February 1996 and February 1999 Susenas surveys. To set a poverty line for 1999 that is conceptually comparable to that for 1996 involves a standard issue of price deflation: How much would it cost in 1999 to purchase a bundle of goods that would produce the same level ofmaterial welfare as the money spent at the poverty line in 1996? Empirically, given major changes in the relative prices of food, the key issue is the weight given food prices in the price index. Using different deflators produces a range of plausible estimates, but they produce a range of plausible estimates, but they produce two"base cases": one working forward from 1996, and one working backward from 1999. If one accepts the official figure of 11.34 percent for February 1996, poverty increased from the immediate pre-crisis rate of about 7-8 percent in the second half of 1997, to the post-crisis rate of about 18-20 percent by September 1998, and 18.9 percent in February 1999. If one begins from the best estimate of the poverty rate in February 1999 (27.1 percent), poverty rose by 9.6 percentage points from 17.5 percent in February 1996. Since February 1999, poverty appears to have subsided considerably but - two years after the crisis started - is still substantially higher than it was immediately before the crisis.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2435.

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Date of creation: 30 Sep 2000
Date of revision:
Handle: RePEc:wbk:wbrwps:2435

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Keywords: Health Economics&Finance; Environmental Economics&Policies; Poverty Reduction Strategies; Economic Conditions and Volatility; Health Systems Development&Reform; Environmental Economics&Policies; Poverty Lines; Achieving Shared Growth; Poverty Assessment; Health Economics&Finance;


References listed on IDEAS
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  1. Elizabeth Frankenberg & Duncan Thomas & Kathleen Beegle, 1999. "The Real Costs of Indonesian Economic Crisis: Preliminary Findings from the Indonesia Family Life Surveys," Working Papers, RAND Corporation Publications Department 99-04, RAND Corporation Publications Department.
  2. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, Econometric Society, vol. 52(3), pages 761-66, May.
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Cited by:
  1. Skoufias, Emmanuel, 2002. "The sensitivity of calorie-income demand elasticity to price changes," FCND briefs, International Food Policy Research Institute (IFPRI) 141, International Food Policy Research Institute (IFPRI).
  2. James B. Ang, 2008. "Finance And Inequality: The Case Of India," CAMA Working Papers 2008-18, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  3. Guido Sandleris & Mark L. J. Wright, 2014. "The Costs of Financial Crises: Resource Misallocation, Productivity, and Welfare in the 2001 Argentine Crisis," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 116(1), pages 87-127, 01.
  4. Balisacan, Arsenio M., 1. "Averting Hunger and Food Insecurity in Asia," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 1(1).
  5. Andrew van Hulten & Michael Webber, 2010. "Do developing countries need 'good' institutions and policies and deep financial markets to benefit from capital account liberalization?," Journal of Economic Geography, Oxford University Press, Oxford University Press, vol. 10(2), pages 283-319, March.
  6. repec:phd:rpseri:rps_2002-06 is not listed on IDEAS
  7. Bourguignon, François & Robilliard, Anne-Sophie & Robinson, Sherman, 2008. "Examining the Social Impact of the Indonesian Financial Crisis Using a Macro-Micro Model," Economics Papers from University Paris Dauphine 123456789/5130, Paris Dauphine University.
  8. Pritchett, Lant, 2005. "The political economy of targeted safety nets," Social Protection Discussion Papers 31498, The World Bank.
  9. Raghbendra Jha & Woojin Kang & Hari K. Nagarajan & Kailash C. Pradhan, 2012. "Vulnerability as Expected Poverty in Rural India," ASARC Working Papers, The Australian National University, Australia South Asia Research Centre 2012-04, The Australian National University, Australia South Asia Research Centre.


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