Mixed feelings in Bangkok

Greetings from Bangkok. (No, I have nothing to do with Thaksin's come back today). But it is unpleasant to see a country where people are really divided like this.

Question: Can you love a corrupt leader if he spoils you?

Oh by the way, this is a best phrase I heard today: "democratic coup" -- is there such thing?

If it's really just a good leader, we're in trouble

What explains variations in investment climate at local levels? We presumed either subnational competition, interest group pressure, or leadership -- or combination of the two or three. As for leadership, we thought of three natures: rent-seeking (as opposed to developmental), inclusive (vs. exclusive), or planned (vs. unplanned). We are yet to get confirmation to all this -- but we're getting there.

But I'm wary. Evidence so far is skewed toward ... leadership. If it is finally proven so, that is discouraging. Even though Ari Perdana rightly said that such "non-standard" variable might explain regional performance, I am afraid we can't go very far as to offer any policy recommendation: because that means it's the person, after all, not the system that matters.

Here, too. Everywhere we go, we can hear praises for the mayor. But when asked if this situation can be sustainable, people don't seem to expect so. On the contrary, they are worried that once the great leader leaves, things can go back into the lousy system. As a matter of fact, one of us, von Luebke confirmed similar negative conclusion in his previous work.

What I'm working on now

To Squeeze Or Not To Squeeze: The Political Economy of Local Investment Climate
N. McCulloch, A.A. Patunru, C. von Luebke, S.B. Wardhani, 2008

Here's the hypothesis:

The stylized fact that lies behind this research is that there are areas which have follow traditional prescriptions for improving their "investment climate" but which have still seen rather poor levels of investment whilst there are others which have implemented rather distortionary policies but have built strong relationships between the government and the private sector which have been successful in stimulating investment and growth.  Thus we have a hypothesis that certain types of relationship between the private and public sectors are an important driver of investment, perhaps even more important than the specific standard policy prescriptions in the literature

This is part of this collaboration.

Will update you later.

....mart's charity

A text from my brother:

I shopped at <name of a mart> today. As displayed on the small screen at the cash register, I was supposed to pay Rp 16,675. But the cashier said "Rp 16,700, Pak". I protested and pointed on to the screen. She said, "Well, Rp 25 will go to charity, Sir". What was she thinking? That robbing someone's money for "charity" is okay? I was pissed.

Me too.

Den Haag and Amsterdam facts 3 weeks ago

Was in Den Haag and Amsterdam three weeks ago but did not have time to access internet (how silly does that sound?). So here's some interesting facts:

• There are more than 1,000 Indonesian restaurants in the Netherlands.
• There are more Indonesians in the Netherlands than in any other part of Europe.
• The jazz group from Den Haag that is going to perform in the coming Java Jazz consists of Indonesian talents.
• Che Guevara's capitalistic logos are everywhere. What were they thinking?
• Ajax costume for kid costs 75 euros -- damn it.
• There are Indonesian girls working in the red light district of Amsterdam -- or so they confessed.
  
• While you are in the Amsterdam's red light district, make sure you eat at the New King, that chinese food restaurant. Just prepare for standing in line for an hour or so.
• But if you want sate kambing, go to Pak Tompul's De Poentjak in Den Haag. Why don't we have that kind of sate kambing here?
• Lastly, if someone else if paying, order dover sole in ... shoot what is that place close to the harbor?
  

And roken is dodelijk!

Solo fact of the day

There was a local regulation in this city saying that no building is allowed to be higher than the Palace. That palace, by the way, is not tall at all. And it was part of past history. The new mayor canceled the regulation and he had to face strong opposition from a group of people claiming themselves as "budayawan" (literally could mean culture experts or simply those who care about cultural heritage). What about plane flying up in the sky, then?

And now three apartments building are being constructed.

Amazon.com and PT Pos Indonesia

We (that's me and Anna) have been loyal customers of Amazon.com. Someone today told us that we shouldn't pay anymore tax or whatever it is called imposed by PT Pos Indonesia on our packages. Is that correct?

Macroeconomics class started today

I will be teaching intermediate macroeconomics at undergraduate level and microeconomics at graduate level this semester. The macro class started today. Here is the plan for the semester:

Main texts: Romer's Advanced Macroeconomics (McGraw-Hill). I encourage students to review their Mankiw's Macroeconomics (Worth Publishers) and Dornbusch et al.'s Macroeconomics (McGraw-Hill). For those who still need clear, intuitive overview on the basic concepts, I suggest to have Moss' A Concise Guide to Macroeconomics (HBS Press). Finally, those who are interested in the current debates on modern macroeconomics, I recommend Snowdon and Vane's A Conversation with Leading Economists (Edward Elgar).

The class is divided into groups who will present their reading on the following topics: 0) Solow Growth Model, 1) Infinite-Horizon and Overlapping-Generations Models, 2) New Growth Theory, 3) Real Business Cycle Theory, 4) Keynesian Fluctuation Theories, 5) Micro Foundations of Incomplete Nominal Adjustment, 6) Consumption, 7) Investment, 8) Unemployment, 9) Inflation and Monetary Policy, and 10) Budget Deficits and Fiscal Policy. This structure borrows completely from Romer.

In due course we will discuss selected news and articles on the Indonesian macroeconomy.

For the students: I apologize in advance that I will have to use some Saturdays to make up for the lost Thursdays due to my fieldworks and the three national holidays. But let's enjoy the semester again, just like we did in the micro course last semester.

Cirque du Senayan

There was one time when President Abdurrahman Wahid called the parliament members a bunch of play group kids. It might still ring true today. I'm sick of how those house members treat government officials. I mean, come on. Yes, government officials are not the nicest persons themselves, and maybe some of them deserve harsh critiques. But geez, be a little respectful and professional. Read the media. The honorable parliamentarians were showing off their power to demand President Yudhoyono's presence before them, explaining the case of Bank Indonesia liquidity loan. There is nothing wrong with that request. But hold on. The President sent his cabinet members. And the house members went ballistic. What is then so wrong about that? After all, President and his staff is one unity. Do they, the house members, have their own Chief, Agung Laksono to present in every hearing, too?

Grow up.

Update: The Jakarta Post today's editorial calls the lawmakers childish. Who doesn't?

Against ASEAN monetary integration

It's simple. A) ASEAN has a principle of non-interference (on its members' internal affairs) while monetary integration requires a supranational monetary authority that yes, will interfere to the members' internal affairs. B) Even if ASEAN countries are willing to compromise on that principle, there is no Asian counterpart to the Bundesbank.

That is from Kenen and Meade. Here is their summary. Otherwise, buy the book.

Helping the poor

I second Arya Gaduh's postcript note that:

[I]t's about time Indonesian politicians start to think in a systematic way about policy support for the poor that minimizes the incentives to the broader economy. I think this can be done -- for all its faults, especially as a program designed and implemented in such a short time, the cash transfer program was relatively successful in achieving such an objective. It's high time that we think of such programs, especially given the expected global food price hikes.

While we're at it, I should mention that I agree with Becker's recommendation that

[T]here are far more effective ways to help poor nations of Africa and elsewhere speed up their rates of economic development and reduce the impact of malaria, Aids, and other devastating diseases. Probably the single most important step is to encourage much more market-friendly policies by African and other governments in poor countries. In addition, it would help to reduce, better still eliminate, tariffs by rich countries on the agricultural and other exports from developing countries, encourage more widespread use of DDT and mosquito netting in combating malaria (see my post on deaths from malaria on Sept. 24, 2006), and provide private and perhaps public subsidies to the development of new drugs that help fight diseases mainly found in poor countries.

Of course, next is to translate that into actions. For which, Dani Rodrik's superb new book may provide good insights.