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Crisis and Income Distribution: A Micro-Macro Model for Indonesia

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  • Robilliard, Anne-Sophie
  • Bourguignon, Francois
  • Robinson, Sherman

Abstract

In this paper, a novel approach is implemented to quantify the effects on poverty and inequality of the financial crisis that hit Indonesia in 1997. It relies on the combination of a microsimulation model and a standard CGE model. These two models are used in a sequential fashion in order to simulate the impact of the crisis and to examine counterfactual policy scenarios. The CGE model is based on a Social Accounting Matrix with 38 sectors and 15 factors of production. It captures structural features of the economy, including binding macro constraints, and incorporates general equilibrium effects. The microsimulation model is based on a detailed representation of the real income generation mechanism at the household level. It captures household heterogeneity in terms of income sources, area of residence, demographic composition, endowment in human capital, and consumption preferences. It is based on a sub-sample of 9,800 households from the 1996 SUSENAS survey. This framework allows us to decompose the effects of the financial crisis as well as to compare the impact of introducing alternative social policy packages during the crisis such as food subsidies, household transfers or public work programs.

Suggested Citation

  • Robilliard, Anne-Sophie & Bourguignon, Francois & Robinson, Sherman, 2001. "Crisis and Income Distribution: A Micro-Macro Model for Indonesia," Conference papers 330957, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:330957
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    File URL: https://ageconsearch.umn.edu/record/330957/files/322.pdf
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    References listed on IDEAS

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    1. S. E. Frandsen & H. G. Jensen & D. M. Vanzetti, 2000. "Expanding ‘Fortress Europe’: Agricultural Trade and Welfare Implications of European Enlargement for Non‐member Regions," The World Economy, Wiley Blackwell, vol. 23(3), pages 309-329, March.
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    Keywords

    Risk and Uncertainty; Public Economics;

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