Abstract
Econometric measures of household welfare are estimated for Indonesia and used to construct welfare distributions consistent with individual demand responses to price and income variability. The effects on poverty of hypothetical reforms of rice pricing and input subsidy policies are then examined by means of dominance tests. With full producer income effects, poverty orderings are found to depend critically on the choice of poverty measure and poverty line, though all distributionally sensitive measures indicate adverse effects on poverty of uncompensated trade liberalizations over a wide range of poverty lines. The poverty effects of price changes at fixed producer incomes are shown to depend crucially on how the necessary producer compensation is financed.
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