The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology

33 Pages Posted: 25 Oct 2001 Last revised: 29 Nov 2022

See all articles by Jed Friedman

Jed Friedman

affiliation not provided to SSRN

James A. Levinsohn

University of Michigan; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2001

Abstract

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.

Suggested Citation

Friedman, Jed and Levinsohn, James A., The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology (October 2001). NBER Working Paper No. w8564, Available at SSRN: https://ssrn.com/abstract=288477

Jed Friedman

affiliation not provided to SSRN

James A. Levinsohn (Contact Author)

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-763-2319 (Phone)
734-764-8063 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
65
Abstract Views
1,202
Rank
222,467
PlumX Metrics