Economic shocks, wealth, and welfare

The immediate effects of the Asian crisis on the well-being of Indonesians are examined using the Indonesia Family Life Survey, an ongoing longitudinal household survey. There, is tremendous diversity in the effect of life shock: for some households, it was devastating; for others it brought new opportunities. A snide areas of mechanisms sects adopted in response to the crisis. Households combined to more fully exploit benefits of scale economies in consumption. Labor supply increased even as real wages collapsed. Households reduced spending on semidurables while maintaining expenditures on foods. Rural households used wealth. particularly, gold, to smooth consumption.