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Lasting Impacts of Indonesia’s Financial Crisis

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  • Martin Ravallion
  • Michael Lokshin

Abstract

We study the poverty impacts over time and space of Indonesia’s severe economy-wide crisis of 1998, using 10 large national surveys spanning 1993–2002. On allowing for shifts in relative prices stemming from the crisis, we find a sharp but geographically uneven increase in the poverty rate in 1998, reflecting both the unevenness in the extent of the economic contraction and the differing initial conditions at the local level. Our counterfactual analyses indicate geographically diverse recovery rates 4 years later. Proportionate impacts on the poverty rate in both 1998 and 2002 were greater in initially better-off and less unequal districts. In the aggregate, a large share—possibly half—of the poverty count in 2002 is attributed to the 1998 crisis.

Suggested Citation

  • Martin Ravallion & Michael Lokshin, 2007. "Lasting Impacts of Indonesia’s Financial Crisis," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 27-56.
  • Handle: RePEc:ucp:ecdecc:v:56:y:2007:p:27-56 DOI: 10.1086/520558
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    References listed on IDEAS

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    Cited by:

    1. Cheung, Chau-kiu & Ng, Sik Hung, 2012. "Impacts of financial crisis on social engagement in Hong Kong," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 623-632.
    2. Cruces, Guillermo & Glüzmann, Pablo & Calva, Luis Felipe López, 2012. "Economic Crises, Maternal and Infant Mortality, Low Birth Weight and Enrollment Rates: Evidence from Argentina’s Downturns," World Development, Elsevier, vol. 40(2), pages 303-314.
    3. Andy Sumner, 2013. "The Evolution Of Education And Health Poverty During Economic Development:The Case Of Indonesia, 1991–2007," Working Papers in Economics and Development Studies (WoPEDS) 201311, Department of Economics, Padjadjaran University, revised May 2013.
    4. Research Group, Development, 2008. "Lessons from World Bank Research on Financial Crises," Policy Research Working Paper Series 4779, The World Bank.
    5. Ferreira, Francisco H.G. & Ravallion, Martin, 2008. "Global poverty and inequality : a review of the evidence," Policy Research Working Paper Series 4623, The World Bank.
    6. Stephan Klasen & Jan Priebe & Robert Rudolf, 2013. "Cash crop choice and income dynamics in rural areas: evidence for post-crisis Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 44(3), pages 349-364, May.
    7. Adama BAH, 2013. "Estimating Vulnerability to Poverty using Panel data: Evidence from Indonesia," Working Papers 201325, CERDI.
    8. Christophe Muller & Marc Vothknecht, 2011. "Group Violence, Ethnic Diversity, and Citizen Participation: Evidence from Indonesia," Research Working Papers 48, MICROCON - A Micro Level Analysis of Violent Conflict.
    9. Andy Sumner & Peter Edward, 2013. "From Low Income, High Poverty to High-Income, No Poverty? An Optimistic View of the Long-Run Evolution of Poverty in Indonesia By International Poverty Lines, 1984–2030," Working Papers in Economics and Development Studies (WoPEDS) 201310, Department of Economics, Padjadjaran University, revised Jun 2013.
    10. Takahiro Akita & Ni Made Inna Dariwardani, 2013. "Chronic and Transient Poverty in Indonesia: A Spatial Perspective with the 2008-2010 Susenas Panel Data," Working Papers EMS_2013_19, Research Institute, International University of Japan.

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