WoPEDS | Working Papers

In Indonesia, the government determines the domestic prices of energy; namely fuel oil, such as gasoline, automotive diesel oil (ADO) and kerosene, gas and electricity. In response to the weakening of rupiah during the 1997/1998 economic crisis and the increasing of the world price of crude oil, the government tends to increase the energy subsidy on domestic prices of fuel oil, gas and electricity, rather than letting these domestic prices follows the world prices of fuel oil, gas and electricity. Currently domestic prices of fuel oil, such as gasoline, automotive diesel oil, kerosene as well as gas and electricity are significantly lower than the world prices of those commodities. Meanwhile government subsidy for fuel oil, gas and electricity has reached approximately 30 per cent of total government expenditure. There have been suggestions that the government should eliminate this subsidy letting the prices of fuel oil, gas and electricity equal to the world prices, since, among others, energy subsidy has foregone government’s opportunities to spend more on development expenditures that would improve the country’s growth rate. On the other hand various groups keep pressing the government to keep the prices of fuel oil, gas and electricity; i.e. do not reduce the […]

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This paper investigates the long-run and short-run impacts of exchange rate volatility on Indonesia’s exports of priority commodities to the United States of America over the monthly period 1997-2005. Estimates of cointegration relations are obtained using ARDL bounds testing procedure. Estimates of the short-run dynamics are obtained using an error-correction model. The results show significant positive and negative coefficients among the range of commodities. However, in the long-run, majority of commodities tend to support the traditional view that higher exchange rate of volatility leads to higher cost and to less foreign trade. The net effect of exchange rate uncertainty on production and exports depends on the degree of relative risk aversion of the exporter of various commodities. This ultimately influences the reallocation of resources by participants. DOWNLOAD

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The distributional impact of policies analyzed in the CGE modelling framework have been constrained in part by the absence of a Social Accounting Matrix (SAM) with disaggregated households. Since Indonesian official SAM does not distinguish households by income or expenditure size, it has prevented accurate assesment for the distributional impact, such as calculation of inequality or poverty incidence. This paper describes how the Indonesian SAM for the year 2003, with 181 industries, 181 commodities, and 200 households (100 urban and 100 rural households grouped by expenditure per capita centiles) was constructed. The SAM (with the size of 768×768 accounts) constitutes the the most disaggregated SAM for Indonesia at both the sectoral and household level. SAM Construction is an essential part of CGE modeling, and this documentation provides greater transparency as well as replicability for further improvement. DOWNLOAD

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Employing child as a labor is categorized as a violation to the human right. But it seems unavoidable in developing country to prevent children entering labor market. Many extensive literatures on the determinant of child labor have been found, but yet, there is limited research on the impact of children work on socioeconomic outcomes. This paper investigates the impact of child labor on child’s education by using the Indonesian Labor Survey/SAKERNAS 2002 data at the district level. DOWNLOAD

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This Research aims to analyze the earnings inequality in Indonesia and to know whether the earnings inequality can be explained by individual characteristic factors such as education and experience; location both urban-rural and province where individual reside and work; and based on socio-demography-economic characteristic. Furthermore, this research tries to know how big those factors contribute to the existing inequality, before and after crisis. Using data from SAKERNAS 1996, 1999, 2002, and 2004, the valid observation is about 145660 individual. Result of analysis clearly indicate that there are significant gender inequalities in earnings in Indonesia, based on education and experience; urban-rural location and province where individual reside and work and based on socio-demography-economic characteristic. The profile of earnings inequality by gender seems to be an “inverted U” fashion, with the male-female earnings gap narrowing as educational attainment went up, and reached a plateau at the “post-secondary level” and then tapered off. The analysis also suggests that the industrial affiliation of female workers matter.The result of estimating Mincerian earnings equation shows that such factor as human capital (years of schooling and experience); socio-demography-economic characteristic (being household’s head, gender, marriage status, work sector); and location factors (urban-rural and province which individual reside and […]

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Indonesia’s national and regional/local policy makers are becoming increasingly concerned with disparities between regions. Aggregate incomes and expenditures in one region may change proportionally more than national changes. This paper contains a technical summary of the structure and special features of INDOTERM model, a member of the TERM family (TERM = The Enormous Regional Model). It treats West Java and the rest of Indonesia as separate economies. We discuss the data required to prepare a version of INDOTERM that represents all the provinces of Indonesia. Finally, we present a long-run simulation of the impacts of the recent hike in global energy prices on the Indonesian economy combined with possible depletion of Indonesia’s crude oil supplies. The special features for future development of INDOTERM are multiple household incomes and expenditures and a “top-down” extension representing sub-provincial municipalities. Nationally, Indonesia’s real income losses due to resource depletion are more than compensated by the sharp increase in the terms of trade arising from the increase in global demand for energy. West Java and the rest of Indonesia fare similarly, as a large proportion of the composite region consists of the remaining provinces of Java which have a similar economic structure to West Java. […]

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This paper is motivated by the inconsistency between food and non-food expenditure estimated from household survey data (SUSENAS) and from nationalaccount (I-O table) and its connection on the issue of inequality in Indonesia.Since non-food expenditure tend to be under-estimated when compared withnational account data, it imply the under-representation of the rich in the cal-culation of inequality in Indonesia. This paper, then applies an approach toreconciling household survey and national accounts data, by re-estimating thesampling weight through minimization of entropy distance of information takinghousehold survey weight as prior, while satisfying some aggregation constraints.The estimated weight then is used to calculate standard indicator of inequalityin Indonesia. The results suggests that while inequality in rural Indonesia doesnot change much, due to possible under- representation of the rich in the survey, inequality in urban Indonesia is highly under-estimated. The “Jakarta factor”seems to account mostly to this discrepancy. DOWNLOAD

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Resource curse literatures explain that countries abundant with natural resources tend to grow slower. This hypothesis is relevant for Indonesia as it is a country rich in natural resources. This paper tries to investigate empirically the relationship between resources abundance and its impact on economic development at the regional level using cross section regression approach. The regional financial data from ministry of finance are combined with regional specific data from BPS to seek the pattern. The paper will shed light on whether resources rich regions in Indonesia are trapped in this curse. DOWNLOAD  

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This study finds that microfinance has positive impact to improvement of MSE’s ferformance indicated by sales; the difference in regional characteristic of MSE is also play role in determining its business scale. Since doubling amount of loan has negative impact to the performance, it’s very important to allocate the loan to the productive activities, such as investment, to improve the business opportunity. DOWNLOAD  

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This paper describes the review of implementation of Blended Learning with WebCT in Principle of Macroeconomics class. The course is conducted at the University of Padjadjaran at second semester in 2005. A questioner and a quantitative data are used to support the importance of those kinds of learning method. DOWNLOAD

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