ABSTRACT
This chapter deals with the impact of financial crises on the incidence of poverty and income distribution, and discusses policy options that can be considered by governments in the aftermath of crises. The cross-country analysis will be carried out by analogy with the differences-indifferences methodology used conventionally in microdata analysis. The methodology consists of examining outcomes such as the impact of a financial crisis on poverty, using observations in a treatment group relative to a control group that are not randomly assigned. The cross-country approach described earlier is complemented with microlevel analysis to assess the effect of financial crises on poverty. Macrolevel data allow for the estimation of the empirical relationship between financial crisis and poverty from a cross-country perspective. Macrolevel data on poverty and income distribution are fraught with deficiencies; this calls for caution in interpreting cross-country evidence of an association between financial crises and poverty, and income distribution.
