Wednesday, January 04, 2012
The Post reported complaints from business community saying that the regulations are too strict and might backfire to the ongoing practices. They claimed that relocation would mean high costs as they have to re-invest in new plants, etc. I agree. Why doesn't the government just limit point one above to new firms and let the existing ones stay where they are? The businessmen also complain about obligation to export 75% of their outputs. I don't think this complaint is well justified. In fact, the main idea of bonded zones is to facilitate export. So, I actually think it has to be 100%. As for the third point above, I don't think it's necessary to restrict sub-contracting. The firms know what's the most economical way of producing. And they know better than the government. If the production sees it more profitable to sub-contract part of the manufacturing processes out to other firms, then let them do it. The government can just focus on monitoring the flow of goods, namely export.
Monday, January 02, 2012
by Joseph E. Aldy, William A. Pizer - #17705 (EEE ITI)
In order to clarify ongoing debates over the competitiveness impacts of climate change regulation, we develop a precise definition that can be estimated with available domestic production, trade, and energy price data. We use this definition and a 20+ year panel of 400+ U.S. manufacturing industries to estimate and predict the effects a U.S.-only $15 per ton CO2 price. We find competitiveness effects on the order of a 1.0 to 1.3 percent decline in production among energy-intensive manufacturing industries, representing about one-third of the policy's impacts on these firms' output.
Organization of Disaster Aid Delivery: Spending Your Donations
by J. Vernon Henderson, Yong Suk Lee - #17707 (PE)
This paper analyzes how different organizational structures between funding and implementing agencies affect the quality of aid delivered and social agendas pursued across neighboring villages in a set disaster context. We model the implied objective functions and trade-offs concerning aid quality, aid quantity, and social agendas of different types of agencies. We analyze three waves of survey data on fishermen and fishing villages in Aceh, Indonesia from 2005-2009, following the tsunami. Different organizational structures result in significantly different qualities of hard aid, differential willingness to share aid delivery with other NGOs in a village, and differential promotion of public good objectives and maintenance of village religious and occupational traditions. This is the first time these aspects have been modeled and quantified in the literature. Some well known international NGOs delivered housing with relatively low rates of reported faults such as leaky roofs and cracked walls; others had relatively high rates. For boats, some had very high rates of boat "failure", boats that sank upon launch, were not seaworthy, or fell apart within a month or two. We also document how a social agenda of particular agencies to promote greater equality can be thwarted and distorted by village leaders, potentially increasing inequality.
Trade And Industrialisation After Globalisation's 2nd Unbundling: How Building And Joining A Supply Chain Are Different And
Why It Matters
by Richard Baldwin - #17716 (ITI)
Revolutionary transformations of industry and trade occurred from 1985 to the late-1990s - the regionalisation of supply chains. Before 1985, successful industrialisation meant building a domestic supply chain. Today, industrialisers join supply chains and grow rapidly because offshored production brings elements that took Korea and Taiwan decades to develop domestically. These changes have not been fully reflected in "high development theory" - a lacuna that may lead to misinterpretation of data and inattention to important policy questions.
Wednesday, December 28, 2011
But, now comes the tricky part, he also says that the government is preparing "cheap car for farmers" program. It will sell a 700 cc energy efficient car at the price of Rp 60 million per unit. He believes this will help reduce the costs faced by the farmers - and hence logistics costs will go down, then competitiveness will improve.
Good intention, however, usually comes with unintended consequences. Imagine you're an average farmer. What would you do with such car? I would use it for many activities outside farming. Or I will resell it with some extra margin. Or I will just rent it out in daily basis. So, rather than increasing the productivity of agriculture sector, the car might be good for other things, which leads to lower-than-expected impact on the competitiveness of ag products.
The news also reports that the government is ready for the first 1000 units. Presumably, there will be follow up batches. I wonder if the money can be of better use should it be directed towards improving the road condition, or building railway access to the bulky ag products rather than "cheap car program". We, by the way, experienced a program like this before. It was called "people's car". And it was a major failure.
Thursday, December 08, 2011
Judd B. Kessler and Alvin E. Roth
The "priority rule," which grants priority on organ waiting lists to those who have previously registered as organ donors, can significantly raise the number of potential donors.
In Organ Allocation Policy and the Decision to Donate (NBER Working Paper No. 17324), Judd Kessler and Alvin Roth find that an organ allocation policy known as the "priority rule," which grants priority on organ waiting lists to those who have previously registered as organ donors, can significantly raise the number of potential donors. Their results suggest that the priority rule, which is currently used in Singapore and which is being introduced in Israel, is a potentially powerful policy tool for encouraging donor registration.
The researchers devise an experimental game which captures some of the key features of the organ donation problem and collect data when students play this game. Each player begins the experiment with "kidneys" that may, with some probability, "fail" during the game. Players receive monetary compensation for each round of the game in which they remain alive. A player may "die" from "kidney failure" if he cannot obtain donated organs. He may also "die" during the game for other reasons - that creates a potential supply of donors whose "kidneys" may be assigned to still-living players who face organ failure. A player gives up some money if he registers to donate his "kidneys" in the event of death -- this captures what the authors view as the psychic cost of registering as an organ donor. A larger pool of potential donors conveys benefits for all players, because it raises the likelihood that if a player experiences "kidney failure" a replacement organ will be available.
The authors compare the effect of reducing this cost of donation, which in their game is a monetary cost, with the effect of adopting a priority rule. Both approaches increase the number of registered donors, but the "priority rule" performs at least as well as, and sometimes better than, an equivalent decrease in the cost of donation. The authors try introducing the priority rule after subjects have made donation decisions a number of times, as well as at the start of the game. In the latter case, the increased performance of the priority rule is even greater. With regard to actual policy design, Kessler and Roth point out that one advantage of the priority rule over strategies for compensating registered donors, and thereby reducing their costs of registering, is that the priority rule seems feasible and can be implemented without any additional costs to the system.
Saturday, December 03, 2011
But some of the efforts listed in the newspaper might not be feasible. For example, budget absorption. The state budget aims a deficit of 2.1% this year. That translates into around IDR 150 trillion. The last updated data of government expenditure that I have shows by October the net spending totaled to positive IDR 4.8 trillion. Now we've entered December. I don't think the government can meet the deficit target - just like in the previous years.
Secondly, the news mentions about Chiang Mai Initiative Multilateralization. This is still a tall order. In the midst of the Lehman crisis, nobody could use it, due to small scale amount of fund and more importantly, the strict conditionality linked to IMF if you asked a bigger amount. Until CMIM is reformed further, it will not serve as a good shock cushion in the region. We still remember that Korea didn't get helped from Chiang Mai. They got it from US Fed.
Friday, December 02, 2011
Addendum: On the same newspaper, Chairman of Indonesia's Transportation Community Danang Parikesit offers a better solution: improve the transportation infrastructure. The Deputy Head of Indonesian Chamber of Commerce and Trade Natsir Mansyur shares this view, namely to improve on the logistics. Way to go, gentlemen.
Tuesday, November 29, 2011
by Martin S. Feldstein - #17617 (EFG IFM ME)
The creation of the euro should now be recognized as an experiment that has led to the sovereign debt crisis in several countries, the fragile condition of major European banks, the high levels of unemployment, and the large trade deficits that now exist in most Eurozone countries. Although the European Central Bank managed the euro in a way that achieved a low rate of inflation, other countries both in Europe and elsewhere have also had a decade of low inflation without incurring the costs of a monetary union.
The emergence of these problems just a dozen years after the start of the euro in 1999 was not an accident or the result of bureaucratic mismanagement but the inevitable consequence of imposing a single currency on a very heterogeneous group of countries, a heterogeneity that includes not only economic structures but also fiscal traditions and social attitudes.
This paper reviews (1) the reasons for these economic problems, (2) the political origins of the European Monetary Union, (3) the current attempts to solve the sovereign debt problem, (4) the long-term problem of inter-country differences of productivity growth and competitiveness, (5) the special problems of Greece and Italy, (6) and the pros and cons of a Greek departure from the Eurozone.
Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving
by James Andreoni, Abigail Payne, Justin D. Smith, David Karp - #17618 (PE)
We explore the effects of local ethnic and religious diversity on individual donations to private charities. Using 10-year
neighborhood-level panels derived from personal tax records in Canada, we find that diversity has a detrimental effect on charitable donations. A 10 percentage point increase in ethnic diversity reduces donations by 14%, and a 10 percentage point increase in religious diversity reduces donations by 10%. The ethnic diversity effect is driven by a within-group disposition among non-minorities, and is most evident in high income, but low education areas. The religious diversity effect is driven by a within-group disposition among Catholics, and is concentrated in high income and high education areas. Despite these large effects on amount donated, we find no evidence that increasing diversity affects the fraction of households that donate. Over the period studied, ethnic diversity rises by 6 percentage points and religious diversity rises by 4 percentage points; our results suggest that charities receive about 12% less in total donations. As areas like North America continue to grow more diverse over time, our results imply that these demographic changes may have significant implications for the charitable sector.
Monday, November 14, 2011
by Daniel M. Hungerman - http://papers.nber.org/papers/W17589
This paper considers substituting one charitable activity for another in the context of religious practice. I examine the impact of the Catholic Church sex-abuse scandal on both Catholic and non-Catholic religiosity. I find that the scandal led to a 2-million-member fall in the Catholic population that was compensated by an increase in non-Catholic participation and by an increase in non-affiliation. Back-of-the-envelope calculations suggest the scandal generated over 3 billion dollars in donations to non-Catholic faiths. Those substituting out of Catholicism frequently chose highly dissimilar
alternatives; for example, Baptist churches gained significantly from the scandal while the Episcopal Church did not. These results challenge several theories of religious participation and suggest that regulatory policies or other shocks specific to one religious group could have important spillover effects on other religious groups.
Trade Prices and the Global Trade Collapse of 2008-2009
by Gita Gopinath, Oleg Itskhoki, Brent Neiman http://papers.nber.org/papers/W17594
We document the behavior of trade prices during the Great Trade Collapse of 2008-2009 using transaction-level data from the U.S. Bureau of Labor Statistics. First, we find that differentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-differentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among differentiated durable manufacturers than among non-durables, prices in both categories barely changed. Third, despite this lack of movement in average price levels, the frequency and magnitude of price adjustments at the product level noticeably changed with the
onset of the crisis.
Gold Sterilization and the Recession of 1937-38
by Douglas A. Irwin http://papers.nber.org/papers/W17595
The Recession of 1937-38 is often cited as illustrating the dangers of withdrawing fiscal and monetary stimulus too early in a weak recovery. Yet our understanding of this severe downturn is incomplete: existing studies find that changes in fiscal policy were small in comparison to the magnitude of the downturn and that higher reserve requirements were not binding on banks. This paper focuses on a neglected change in monetary policy, the sterilization of gold inflows during 1937, and finds that it exerted a powerful contractionary force during this period. The transmission of this monetary shock to the real economy appears to have worked through lower asset (equity) prices and higher interest rates.
Monday, October 24, 2011
Tuesday, August 30, 2011
Tuesday, August 02, 2011
by Catherine Tucker - #17246 (PR) http://papers.nber.org/papers/W17246
This paper investigates how the destabilizing of a social network may increase the scope of network externalities, using data on sales of a video-calling system made to an investment bank's employees and subsequent usage by these customers. The terrorist attacks of 2001 led potential customers in New York to start communicating with a new and less predictable set of people when their work teams were reorganized as a result of the physical displacement that resulted from the attacks. This did not happen in other comparable cities. These destabilized communication patterns were associated with potential adopters in New York being more likely to take into account a wider spectrum of the user base when deciding whether to adopt relative to those in other cities. Empirical analysis suggests that the aggregate effect of network externalities on adoption was doubled by this instability.
2. The Value of Honesty: Empirical Estimates from the Case of the Missing Children
by Sara LaLumia, James M. Sallee - #17247 (PE) http://papers.nber.org/papers/W17247
How much are people willing to forego to be honest, to follow the rules? When people do break the rules, what can standard data sources tell us about their behavior? Standard economic models of crime typically assume that individuals are indifferent to dishonesty, so that they will cheat or lie as long as the expected pecuniary benefits exceed the expected costs of being caught and punished. We
investigate this presumption by studying the response to a change in tax reporting rules that made it much more difficult for taxpayers to evade taxes by inappropriately claiming additional dependents. The policy reform induced a substantial reduction in the number of
dependents claimed, which indicates that many filers had been cheating before the reform. Yet, the number of filers who availed themselves of this evasion opportunity is dwarfed by the number of filers who passed up substantial tax savings by not claiming extra
dependents. By declining the opportunity to cheat, these taxpayers reveal information about their willingness to pay to be honest. We
present a novel method for inferring the characteristics of taxpayers in the absence of audit data. Our analysis suggests both that this willingness to pay to be honest is large on average and that it varies significantly across the population of taxpayers.
Friday, May 06, 2011
Today The Jakarta Post runs a nice obit written by Thee Kian Wie.
I'm grateful to have known Jamie. He once commented on my draft paper. A rarity, for it was like a master giving a tap on a rookie's shoulder.
Rest in peace, Pak Jamie.
Tuesday, April 26, 2011
by Gordon H. Hanson, Chong Xiang - #16964 (ITI)
in which government provision of health services is weaker, and (2) denominations with a decentralized governance structure attract more adherents in countries in which the productivity of pastor effort is higher. These findings shed light on factors determining the
composition of religion within countries, helping account for the rise of new Protestant denominations in recent decades.
Wednesday, December 29, 2010
Efficiency and Redistribution: An Evaluative Review of Louis Kaplow's The Theory of Taxation and Public Economics
Does Network Theory Connect to the Rest of Us? A Review of Matthew O. Jackson's Social and Economic Networks
Why Isn't Mexico Rich? [this was linked in this blog before as an NBER working paper] Gordon H. Hanson
Saturday, December 18, 2010
by Kenneth J. Arrow, Partha Dasgupta, Lawrence H. Goulder, Kevin J. Mumford, Kirsten Oleson - #16599 (EEE EFG)
We develop a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining well-being over time. The framework focuses on whether a comprehensive measure of wealth - one that accounts for natural
capital and human capital as well as reproducible capital - is maintained through time. Our framework also integrates population
growth, technological change, and changes in health. We apply the framework to five countries that differ significantly in stages of
development and resource bases: the United States, China, Brazil, India, and Venezuela. With the exception of Venezuela, significant
increases in human capital enable comprehensive wealth to be maintained (and sustainability to be achieved) despite significant
reductions in the natural resource base. We find that the value of "health capital" is very large relative to other forms of capital.
As a result, its growth rate critically influences the growth rate of per-capita comprehensive wealth.
Unilateral Tariff Liberalisation
by Richard Baldwin - #16600 (ITI)
Unilateral tariff liberalisation by developing nations is pervasive but our understanding of it is shallow. This paper strives to partly
redress this lacuna on the theory side by introducing three novel political economy mechanisms with particular emphasis is on the role
of production unbundling. One mechanism studies how lowering frictional barriers to imported parts can destroy the correlation of
interests between parts producers and their downstream customers. A second mechanism studies how Kojima's pro-trade FDI raises the political economy cost of maintaining high upstream barriers. The third works via a general equilibrium channel whereby developing
country's participation in the supply chains of advanced-nation industries undermines their own competitiveness in final goods, thus
making final good protection more politically costly. In essence, developing nations' pursuit of the export-processing industrialisation undermines their infant-industry industrialisation strategies.
Angus Deaton's paper is fascinating – and depressing in almost equal measure. Deaton is the nearest thing to God in the field of measuring development. He is perhaps the single most respected economist working in this field having built a reputation over decades for his meticulous unpicking of all manner of development data – when Deaton says something, you listen.
Tuesday, November 16, 2010
by Peter Arcidiacono, Andrew W. Beauchamp, Marjorie B. McElroy - #16517
We develop a directed search model of relationship formation which
can disentangle male and female preferences for types of partners and
for different relationship terms using only a cross-section of
observed matches. Individuals direct their search to a particular
type of match on the basis of (i) the terms of the relationship, (ii)
the type of partner, and (iii) the endogenously determined
probability of matching. If men outnumber women, they tend to trade
a low probability of a preferred match for a high probability of a
less-preferred match; the analogous statement holds for women. Using
data from National Longitudinal Study of Adolescent Health we
estimate the equilibrium matching model with high school
relationships. Variation in gender ratios is used to uncover male
and female preferences. Estimates from the structural model match
subjective data on whether sex would occur in one's ideal
relationship. The equilibrium result shows that some women would
ideally not have sex, but do so out of matching concerns; the reverse
is true for men.
This paper provides an analytical narrative of Indonesian economic growth over the past two decades. Particular attention is paid to the key economic crisis events of 1997-98 and 2008-09, and how and why Indonesia's response to them was completely different. We emphasize and illustrate how the years 1997-98 were a watershed in the country's economic history and political economy. We underline the country's generally good economic performance, especially the rapid recovery over the past decade, while also highlighting the fact that its economic growth has never quite matched that of the very high growth East Asian economies. The final section analyzes some key policy challenges, including embedding reforms in a highly fluid political environment, maintaining a broadly open commercial policy regime, the regional and international architecture, macroeconomic management, and 'connectivity' and regional (sub- national) development.
Indonesia's 1999 decentralization law gave local governments in Indonesia an unprecedented opportunity to adopt pro-development policies. We estimate the effect of decentralization (enacted in 2001) on national economic performance using a synthetic case control methodology. Our results indicate that decentralization has had no discernable effect on Indonesia's economic output as measured by gross domestic product. To explain this finding, we use subnational data to probe two mechanisms—interjurisdictional competition and democratic accountability—that underlie all theories linking decentralization to better economic outcomes. Our findings suggest that extreme heterogeneity in endowments, factor immobility, and the endogenous deterioration of local institutions can each undermine the supposed development-enhancing promises of decentralized government in developing countries.
Another call for more case studies, I suppose.
We reaffirm our strong commitment to bring the Doha Development Agenda to a prompt and successful conclusion. Bearing in mind that 2011 will be a critically important "window of opportunity," we direct our Ministers to empower our representatives to engage in comprehensive negotiations with a sense of urgency in the end game, built on the progress achieved, including with regard to modalities, consistent with the Doha mandate. We affirm our commitment to win domestic support in our respective systems for a strong agreement. In our continued efforts to resist protectionism, we agree to extend our commitment on standstill made in 2008 to the end of 2013 to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization inconsistent measures in all areas, including those that stimulate exports. We commit to take steps to rollback trade distorting measures introduced during the crisis. Furthermore, we will continue to exercise maximum restraint in implementing measures that may be considered to be consistent with WTO provisions if they have a significant protectionist effect and promptly rectify such measures where implemented.
In this paper we analyze the decision of small and micro firms to formalize, i.e. to obtain business and other licenses in rural Indonesia. We use the rural investment climate survey (RICS) that consists of non-farm rural enterprises, most of them microenterprises, and analyze the effect of formalization on tax payments, corruption, access to credit and revenue, taking into account the endogeneity of the formalization decision to such benefits and costs. We show, contrary to most of the literature, that formalization reduces tax and corruption payments. The benefits of formalization, and therefore the likelihood of being formal, also depend on characteristics such as firm size, as well as the education and ethnicity of the owner.
That is the abstract of a new paper by Neil McCulloch, Günther G. Schulze, and Janina Voss, "What Determines Firms' Decision to Formalize? Evidence from Rural Indonesia" (2010), Discussion Paper Series Nr. 13, Department of International Economic Policy, University of Freiburg, Germany.
Wednesday, October 27, 2010
Tuesday, October 26, 2010
by Alberto Bisin, Eleonora Patacchini, Thierry Verdier, Yves Zenou - #16465 (POL)
We propose a theoretical framework to study the determinants of ethnic and religious identity along two distinct motivational processes which have been proposed in the social sciences: cultural conformity and cultural distinction. Under cultural conformity, ethnic identity is reduced by neighborhood integration, which weakens group loyalties and prejudices. On the contrary, under cultural distinction, ethnic minorities are more motivated in retaining their own distinctive cultural heritage the more integrated are the neighborhoods where they reside and work. Data on ethnic preferences and attitudes provided by the Fourth National Survey of Ethnic Minorities in the UK enables us to test the relative significance of these two identity processes. We find evidence consistent with intense ethnic and religious identity mostly formed as a cultural distinction mechanism. Consistently, we document that ethnic identities are more intense in mixed than in segregated neighborhoods.
Why Isn't Mexico Rich?
by Gordon H. Hanson - #16470 (ITI)
Over the last three decades, Mexico has aggressively reformed its economy, opening to foreign trade and investment, achieving fiscal discipline, and privatizing state owned enterprises. Despite these efforts, the country's economic growth has been lackluster, trailing that of many other developing nations. In this paper, I review arguments for why Mexico hasn't sustained higher rates of economic growth. The most prominent suggest that some combination of poorly functioning credit markets, distortions in the supply of non traded inputs, and perverse incentives for informality creates a drag on productivity growth. These are factors internal to Mexico. One possible external factor is that the country has the bad luck of exporting goods that China sells, rather than goods that China buys. I assess evidence from recent literature on these arguments and suggest directions for future research.
Tuesday, October 12, 2010
Monday, August 23, 2010
by Raquel Fernandez - #16277 (EFG LE LS PE POL)
This paper reviews the literature on culture and economics, focusing primarily on the epidemiological approach. The epidemiological approach studies the variation in outcomes across different immigrant groups residing in the same country. Immigrants presumably differ in their cultures but share a common institutional and economic environment. This allows one to separate the effect of culture from
the original economic and institutional environment. This approach has been used to study a variety of issues, including female labor force participaiton, fertility, labor market regulation, redistribution, growth, and financial development among others.
Tuesday, August 17, 2010
“What’s up, Mister Chairman? Long time no see!”
“Ni-ho-ma? How’re you doing?”
“Great, Chairman. Just finished with a conference on…”
“Crisis? I bet you did! Seriously, don’t you people have anything else to do? This crisis is peanuts! It’s a small, tiny hiccup for China!”
“I reckoned that, Sir. I can’t believe you rebounded that quickly! Approaching two digits again next year? Impressive!”
“That’s okay. Singapore would impress you, too. And look at your own country; it’s also doing very well. So what crisis are you guys talking about? C’mon, we’ve seen harder times, have we not? Don’t be sissy…”
“So now, how do you like your visit?”
“Well, it’s fantastic! I didn’t get the chance to see the Great Wall, nor could I go to the Forbidden City – conference was tight. But I sneaked out to Tiananmen Square and …”
“Ah, those stuff. Standard! You can visit them anytime. They’re eternal. But how about food? Now, that is important…”
“Sure thing, Chairman. This great conference organizer took us to Duck King…”
“Wait! Did you just say Duck King? The one in Beijing? The original, authentic, first-timer Duck King? No kidding!”
“You heard me, Chairman. Duck King. The original Peking Duck, Beijing’s most precious gift to the entire civilization!”
“Ah, that is an understatement, my friend. We believe God has created only ten sets of masterpiece in the history of universe. Two of them are Peking ducks and Chinese cooks. They are so good I don’t really care about the remaining eight…”
“Well, that sounds a bit of an exaggeration, Sir. But I won’t argue you on that. As a matter of fact, we have this best restaurant in Jakarta serving Peking duck. Now I feel like I have been cheated the entire time. Why can’t they make it like this here?”
“Hahaha… that’s true. We can make iPhones better than Americans and send them out to the world. We make Lenovos, send them out. We even created the ugly looking Crocs and made you East Asians love ‘em. But listen, dude. You want Pecking duck, you come eat it here. Right in Beijing! Because Beijing, the duck, and the cook are one package, my friend! They’re perfect complements as you economists would call ‘em”
“I guess you’re right, Mr. Mao”
“Now what else have you seen?”
“Oh, I have this friend from newspaper. She took us to … let me remember the name … ah, Shichahai! It’s a really cool place, they have…”
“Oh, that! Of course. I love that place too. Where else can you relax, sipping Chinese tea, and listening to Santana? And they’ve got Starbucks, too, you noticed?”
“Yup. Your country is so globalized…”
“Excuse me? Watch your words, young man. You are in the most capitalistic country in the world! Did I say we invented … well, we made iPhone? Do you know we have our own state in US called Walmart? And by the way, that Blackberry you Indonesians are so crazy about? Man, that thing’s ridiculously expensive! Them Canadians are ripping you off. What are they, bloodsuckers? Just be patient, we’ll make it cheaper very soon!”
“Err, I’m sure you will, Sir”
“Trust me. We’re the most efficient neoliberal in the world”
“You think so?”
“Hell yes! Not only that. We have produced all market icons fancied even by them socialist street activists. Did you see those t-shirts with my picture or Che’s on them? They’re bestsellers! Everybody from London to Buenos Aires, from Jakarta to Caracas buy them. Hail capitalism! Now you tell this to Chavez or that guy Morales”
“I’ll do. And ugh, speaking about t-shirt, I saw one with your trade mark logo – except that they replaced your face with Obama’s…”
“Hahaha! Is that right? Well, I don’t mind. I like this dude Obama. I heard he just won an, what, Oscar?”
“No, it’s the Nobel, Sir”
“Whatever. But see? This guy, I knew he’s got talent. Unlike Bush…”
“Alrite, Chairman. I think I should be boarding now”
“OK. Have a safe flight. Say hi to Soesilo”
17:00 - 18:30
"Maynard, very nice to meet you"
"Same here. What brings you to London?"
"Some conference. How's life?"
"You mean death? Either way I'm good. What conference are you having?"
"Was. Finished yesterday, that's why I'm here now. It was some kind of reassessment of orthodox and heterodox approaches to investment and growth. Great debate there"
"Ah, that. Boring"
"We talked about you a bit"
"That's not surprising. But rather unfortunate. People remember me only when the economy is in crisis"
"Oh don't be too sentimental, Maynard. Take it as a complement: yes there's a lack of demand and yes monetary policy is rather impotent. A vindication to partof your General Theory, I suppose"
"You have problem with my book?"
"Yes, I do, a bit. Wanna discuss this now?"
"Of course not. We're sipping coffee in Trafalgar Square and you want to talk about liquidity trap? No way"
"Right, Maynard. Let's talk about something more fun then. What are you up to?"
"I'm setting up a school. Call it 'I-Told-You-So-School-of-Economics'. Wanna join?"
"Indeed. I'm hiring Krugman as the department head"
"No, I don't really like that guy"
"And what do you do apart from economics?"
"I'm writing a book about my wife Lydia. Just started it. Hey, what about you. What have you been doing. Apart from economics, I suppose"
"I'm rereading Dostoevsky's Notes from Underground and I just finished Gordimer's Beethoven was One Sixteenth Black"
"Great picks. Underground is different from Dostoevsky's other works. You know me, I like everything different. That's actually the strength of my works: different from mainstream"
"But I haven't read Nadine Gordimer. Is she good? Tell me about thisBeethoven..."
"Sure. Here goes..."
18:30 - 19.15
"It's getting colder. What's your plan?"
"Nothing in particular. I'm thinking of some play, Maynard. Any suggestion?"
"Play. Good idea. Anything you fancy?"
"Well I guess I'll go see Phantom of the Opera again. What about you? I heard Ian McKellen is playing Waiting for Godot"
"Yeah, but I've seen it. I'll go see Billy Elliot. Elton John does the scores"
"Now that I have seen twice. So I guess we'll go separate ways?"
"Yes. Shall we meet again afterward?"
"Yes, let's say 23:00?"
"OK. Let's do this. Since Billy is shorter than Phantom and the theater is two stations away from here, I'll come back again to this place..."
"Great. Let's meet up in front of Her Majesty's theater"
"You too, Maynard"
23:00 - 23:15
"Sorry for waiting"
"No, you're alright. Just got here. How's the play?"
"Terrific. How's Billy?"
"Not bad at all. Better than the movie. Tell me about Phantom. Who played Christine?"
"Is she good?"
"Very good. She's amazing"
"Really? Better than Sarah Brightman?"
"Better than Sarah Brightman"
"Glad you enjoyed it. Hey let's go to this new cafe over at Piccadilly. I heard it's great"
23:15 - 02:05
"Alright. I'm tired. You're staying in London?"
"No, I'm going back to Brighton. Will fly back to Jakarta tomorrow"
"I'll see. OK then. I'm going back to Bloomsbury. Nice meeting you"
"Same here, Maynard. Keep in contact"
Tuesday, August 10, 2010
Monday, August 09, 2010
Friday, August 06, 2010
Inflation in June and July has been higher than expected. As August/Sept will observe fasting month and eid days festivities, yearly inflation might also hit the upper bound (set at 6% by BI), hence a need for some tightening up.
As for employment, GOI expects unemployment to drop to 7.6%. With a growth target of 5.8%, that implies an assumption of 400,000 absorbtion per 1% growth. I guess we're not there yet.
Tuesday, July 27, 2010
Friday, March 19, 2010
Monday, March 15, 2010
3:30 - 5:00 pm
Yung Chul Park, Korea Univ., "RMB Internationalization: Its implications for
Financial and Monetary Cooperation in East Asia"
- Arianto A. Patunru, Univ. of Indonesia
- Georges de Menil, Paris School of Economics
- Vu Quoc Huy, Institute of Economics/National Economics Univ.
Sunday, December 27, 2009
Friday, December 25, 2009
Some quotes from Time (Bernanke's US Issue) that might as well be explaining Indonesia (ie, SMI-Boediono's rescue act and the noise that follows NOW)
"What we don't know is what the economy and our lives would look like if a few individuals had not acted on our behalf and had simply sat on their hands" (Stengel, "To Our Readers")
"Bank runs are even scarier now that they don't require an actual run on an actual bank. Billins of dollars can be withdrawn with a keystroke, and all sorts of nonbank players ar now dangerously intertwined with financial markets" (Grunwald, "Ben Bernanke")
"Now that the fire is out, it's easy to attack the firefighters for getting the furniture wet or holding their hoses improperly" (Grunwald, "Ben Bernanke")
"This wasn't a war of choice. It was a war of necessity" (Grunwald, quoting Tim Geithner, "Ben Bernanke")
"Bernanke has become a political victim of his apolitical success... It's now up to our dysfunctional political system to let him do his job -- and to fix the financial system so that he never has to save the world again" (Grunwald, "Ben Bernanke")
Thursday, December 24, 2009
For wonkish, go google Diamond-Dybvig model.
But let's make it easier. Some people seem to think "systemic risk" here means the bank is related to other banks and therefore can affect the latter in a contagious process. Maybe I'm wrong, but Burhanuddin Abdullah and Anwar Nasution seemed to use this concept in their hearing with DPR's Pansus. According to their logic, since BC is small, it couldn't have systemic risk whatsover.
Some others believe it is expectation that really matters. (I got that impression from for example Boediono's and Miranda Goeltom's responses to questions from DPR's Pansus). As a depositor in Bank A, you, a risk-averse person (and by the way, that's a fair generalization), would feel anxious when you see people run Bank B across the street. No matter how small Bank B is and no matter how unrelated Bank A and Bank B is. The only connection between the two banks is what we call human expectation, driven by the act of observing something that you then expect might happen to you, too. Your reaction can vary. If, by any chance, you have the information that general situation is manageable (eg there hasn't been any news about world struck by crisis or something; or any other relevant information), you might not withdraw your money from Bank A. Yet. But, in many cases, you can't have full information on whether or not the situation is "manageable". It can take only a couple of depositors loudly saying "Gee, that bank is falling! This bank is next, I'm gonna withdraw!". Before you know it, Bank A is rushed, too. Then Bank C, D, so forth. It is therefore "systemic". This latter situation is sometimes affected by your perception on the authority, in this case Bank Indonesia and MOF. When you know (or are told) that BI and MOF are short of liquidity and fiscal capacity to deal with a crisis, your incentive to quickly withdraw and save your money at home rather than bank increases. In other time, you think BI and MOF can handle the situation well (even if Bank B is rushed, their depositors are saved, etc), in which case, your incentive to withdraw is relatively small.
So, it's about expectation. I'm more persuaded by this second understanding about the word "systemic risk".
But I fully agree with State Minister for SOEs Mustafa Abubakar's remark: "The leader doesn't need just a technical capacity. It requires also leadership and good management capacity".
Tuesday, December 22, 2009
So de facto, we have had an increasing trade with China. Not just import, but also export.
Monday, December 21, 2009
But I can't understand why you should give an award to a petty thief. The legal system is weak, yes. Big thieves should be punished big time. But that doesn't mean you can just forgive small thieves. Because thief is thief, regardless of the scale of the theft.
A sympathy for an old woman who "were forced by situation to steal something almost worthless" might sound just. But giving her an award is I think just too much. You're sending a very wrong signal to the populace.
Sunday, December 20, 2009
And disrespecting the law and constitution is moral, gentlemen?
Wednesday, December 16, 2009
Thursday, September 17, 2009
Saturday, September 12, 2009
As known, the state budget has assumed an oil price of USD 60 per barrel. Now the price stands around USD 70 already. And might even increase in the near future, considering the world economic recovery.
Now the budget also assumes that every USD 1 increase beyond the assumed USD 60 would add Rp 0.1 trillion to the deficit. Now, if Indonesian Crude Price (ICP) is USD 65 per barrel (usually it is USD 5 below the world oil price quoted in US market) then there is an increase of USD 5 trillion on top of the assumed price. According to the elasticity assumption, it should add Rp 0.5 trillion to the deficit. But, why ask Rp 3 to 5 trillion?
Thursday, September 10, 2009
Wednesday, September 09, 2009
Of course. It's just a measure of production. Yet, that's the best we have now -- for again, measuring production.
We already started "green GDP" here and there, taking account of natural resource depletion and environmental degradation. Despite the rough proxies used, it's a good way to remind us that the business-as-usual production might be harmful to the environment.
But many people push it even more to measure happiness (or in general, well-being). So far I'm skeptical. Production is measurable. So is green production. But happiness? It might be measurable on individual basis, or at least household. You might even come out with measures like aggregare willingness to pay to proxy demand for something (including intangible goods) at community level. But pushing it to grand scale like national GDP will encounter serious aggregation problem.
One of those happiness measures found that the most happy people live in Bhutan. I, for one, don't want to live in Bhutan.