TY  - JOUR
AU  - Friedman, Jed
AU  - Levinsohn, James
TI  - The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8564
PY  - 2001
Y2  - October 2001
DO  - 10.3386/w8564
UR  - http://www.nber.org/papers/w8564
L1  - http://www.nber.org/papers/w8564.pdf
N1  - Author contact info:
Jed Friedman
The World Bank
E-Mail: jfriedman@worldbank.org

James A. Levinsohn
Yale School of Management
PO Box 208200
New Haven, CT  06520
Tel: 734/763-2319
Fax: 734/764-2769
E-Mail: James.Levinsohn@yale.edu
AB  - 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.
ER  -