Lasting Local Impacts of an Economywide Crisis

35 Pages Posted: 2 Feb 2005

See all articles by Martin Ravallion

Martin Ravallion

Georgetown University

Michael Lokshin

World Bank - Development Research Group (DECRG); National Research University Higher School of Economics

Date Written: February 2005

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? Ravallion and Lokshin 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.

This paper - a product of the Poverty Team, Development Research Group - is part of a larger effort in the group to assess the social impacts of economywide crises.

Keywords: Indonesia, financial crisis, poverty, inequality, geography

JEL Classification: I32, O53

Suggested Citation

Ravallion, Martin and Lokshin, Michael, Lasting Local Impacts of an Economywide Crisis (February 2005). World Bank Policy Research Working Paper No. 3503. Available at SSRN: https://ssrn.com/abstract=659063

Martin Ravallion (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

Michael Lokshin

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-1772 (Phone)
202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/mlokshin

National Research University Higher School of Economics

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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