Indonesia since the late 1960s constitutes an excellent case study in the political economy of trade protection. There have been major changes in the overall policy regime, from liberalism to significant intervention, and back towards liberalism. There have been large, though declining,...

When formal regulation is weak or absent, communities often use other channels to induce pollution abatement by local factories in a process of "informal regulation." The resulting "pollution equilibrium" reflects the relative bargaining power of the community and the plant. This note uses...

We consider estimation of a panel data model where disturbances are spatially correlated in the cross-sectional dimension, based on geographic or economic proximity. When the time dimension of the data is large, spatial correlation parameters may be consistently estimated. When the time...

This paper estimates the equilibirum level of the real exchange rate for Indonesia in order to measure the extent of overvaluation of the rupiah at the time of the Asian crisis in 1997. The equilibrium level of the real exchange rate is measured using cointegration approach, unobserved component...

This paper estimates the agglomeration benefits that arise from vertical linkages between firms. The analysis is based on international trade and economic geography theory developed by Krugman and Venables (1995). We identify the agglomeration benefits off the spatial variation in firm level...

How can we account for Indonesia's astonishing development performance between 1965 and 1997-rapid growth, massive reduction in the incidence of poverty, low income - inequality and substantial diversification of the economy - in the face of extremely dirigiste microeconomic policies, even by...

Every three years, Indonesia fields simultaneously two nationwide surveys which collect consumption data. One collects consumption using 23 questions, the other using 320 questions. Based on a repeated experiment in which the two questionnaires were randomly assigned across households, I examine...

Financial development plays a key role in economic growth, but there is limited research on how greater access to financial services affects households’ intertemporal choices. By conceptualizing intertemporal choices into utility maximization problems, this study shows that such choices are...

The paper examines the effectiveness of macroprudential policy in Indonesia and policy reactions to economic developments. Using the structural vector autoregression and data on the regulatory LTV ratio, we investigate the policy effectiveness in controlling credit growth and real property...

In 2020 admission to public school in Indonesia has switched from using a nationwide standardized exam into a “school grade”-based admission. While this change should incentivize an increase in student and teaching effort to get higher grades, it potentially creates a moral hazard. I analyze...