Tuesday, November 16, 2010

Terms of endearment?

From NBER Research.

Terms of Endearment: An Equilibrium Model of Sex and Matching
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.


Most recent thorough overview on Indonesia's growth dynamics

From the inbox:

Indonesia's Growth Dynamics
M. Chatib Basri and Hal Hill

Working Paper in Trade and Development No. 2010/10, Australian National University

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.

The paper is forthcoming in Asian Economic Policy Review

Decentralization: friend or not-yet?

From the inbox: 

Decentralization and Economic Performance in Indonesia
Thomas B Pepinsky and Maria M Wihardja (2010)

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.

From Yokohama for Doha

Excerpt from APEC Economic Leaders' Declaration as a result of the Yokohama meeting in November 13-14, 2010:

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.


Is being formal good?

New in inbox:

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, G√ľnther 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.