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Lasting local impacts of an economywide crisis

Author

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  • Ravallion, Martin
  • Lokshin, Michael

Abstract

The immediate welfare costs of an economywide crisis can be high, but are there also lasting impacts? And are they greater in some geographic areas than others? The authors study Indonesia’s severe financial crisis of 1998. They use 10 national surveys spanning 1993–2002, each covering 200,000 randomly sampled households, to estimate the impacts on mean consumption and the incidence of poverty across each of 260 districts. Counterfactual analyses indicate geographically diverse impacts years after the crisis. Proportionate impacts on the poverty rate were greater in initially better off and less unequal areas. In the aggregate, a large share - possibly the majority - of those Indonesians who were still poor in 2002 would not have been so without the 1998 crisis.

Suggested Citation

  • Ravallion, Martin & Lokshin, Michael, 2005. "Lasting local impacts of an economywide crisis," Policy Research Working Paper Series 3503, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3503
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    References listed on IDEAS

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    1. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September.
    2. Dercon, Stefan, 2004. "Growth and shocks: evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 74(2), pages 309-329, August.
    3. Elizabeth Frankenberg & James P. Smith & Duncan Thomas, 2003. "Economic Shocks, Wealth, and Welfare," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
    4. Jed Friedman & James Levinsohn, 2002. "The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology," World Bank Economic Review, World Bank Group, vol. 16(3), pages 397-423, December.
    5. Banerjee, Abhijit V & Newman, Andrew F, 1994. "Poverty, Incentives, and Development," American Economic Review, American Economic Association, vol. 84(2), pages 211-215, May.
    6. Emmanuel Skoufias & Asep Suryahadi, 2000. "Changes in Household Welfare, Poverty and Inequality During the Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(2), pages 97-114.
    7. Ravallion, Martin & Bidani, Benu, 1994. "How Robust Is a Poverty Profile?," World Bank Economic Review, World Bank Group, vol. 8(1), pages 75-102, January.
    8. Pradhan, Menno & Suryahadi, Asep & Sumarto, Sudarno & Pritchett, Lant, 2000. "Measurements of poverty in Indonesia - 1996, 1999, and beyond," Policy Research Working Paper Series 2438, The World Bank.
    9. Shaohua Chen & Martin Ravallion, 2004. "How Have the World's Poorest Fared since the Early 1980s?," World Bank Research Observer, World Bank Group, vol. 19(2), pages 141-169.
    10. Arsenio Balisacan & Ernesto Pernia & Abuzar Asra, 2003. "Revisiting growth and poverty reduction in Indonesia: what do subnational data show?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(3), pages 329-351.
    11. Lokshin Michael & Ravallion Martin, 2004. "Household Income Dynamics in Two Transition Economies," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 8(3), pages 1-33, September.
    12. Jyotsna Jalan & Martin Ravallion, 1998. "Geographic Poverty Traps?," Boston University - Institute for Economic Development 86, Boston University, Institute for Economic Development.
    13. Asep Suryahadi & Sudarno Sumarto & Lant Pritchett, 2003. "Evolution of Poverty During the Crisis in Indonesia," Asian Economic Journal, East Asian Economic Association, vol. 17(3), pages 221-241, September.
    14. Thomas, Duncan & Beegle, Kathleen & Frankenberg, Elizabeth & Sikoki, Bondan & Strauss, John & Teruel, Graciela, 2004. "Education in a crisis," Journal of Development Economics, Elsevier, vol. 74(1), pages 53-85, June.
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    Cited by:

    1. Stefan Dercon (QEH), "undated". "Vulnerability: a micro perspective," QEH Working Papers qehwps149, Queen Elizabeth House, University of Oxford.
    2. Stefan Dercon (QEH), "undated". "Risk, Growth and Poverty: what do we know, what do we need to know?," QEH Working Papers qehwps148, Queen Elizabeth House, University of Oxford.
    3. SAWADA Yasuyuki & Rima BHATTCHARYAY & KOTERA Tomoaki, 2011. "Aggregate Impacts of Natural and Man-made Disasters: A quantitative comparison," Discussion papers 11023, Research Institute of Economy, Trade and Industry (RIETI).
    4. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta & Krutikova, Sofya, 2008. "The consequences of child labor : evidence from longitudinal data in rural Tanzania," Policy Research Working Paper Series 4677, The World Bank.
    5. World Bank, 2006. "Making the New Indonesia Work for the Poor," World Bank Other Operational Studies 8172, The World Bank.
    6. TAMURA Sakuya & SAWADA Yasuyuki, 2009. "Consumption Insurance against Unforeseen Epidemics:The Case of Avian Influenza in Vietnam," Discussion papers 09023, Research Institute of Economy, Trade and Industry (RIETI).
    7. World Bank, 2012. "History and Evolution of Social Assistance in Indonesia," World Bank Other Operational Studies 12259, The World Bank.
    8. Santos, Paulo & Barrett, Christopher B., 2006. "Informal Insurance in the Presence of Poverty Traps: Evidence from Southern Ethiopia," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25487, International Association of Agricultural Economists.

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