This paper looks at the welfare consequences of trade liberalization in a context of rising
food prices, in Indonesia during the 2000s. Indonesia has liberalized trade substantially in the
early 2000s. However, as a major food staple importer, it was hit by world prices surges in the
second half of the 2000s. Using the Indonesia Family Life Survey between 1997 and 2007, as
well as disaggregated (by item and spatially) price data from the Indonesian Statistical Office,
we estimate the welfare consequences and distributional impact across households of these
contrasting changes, allowing for imperfect pass-through (spatially differentiated) from tariffs
and world prices to the local prices of traded goods.