This essay examines the choice of monetary policy instrument for a small open economy under flexible exchange rate regime with some reference to Indonesia. To approach the issue a simple ad-hoc aggregate supply-IS-LM model is used for the analysis. Although basically the issue concerning monetary instrument problem tend to be more empirical rather than theoretical, this essay argues that some rules of thumb could still be drawn from the analysis of the theoretical model to solve the problem. The recognition of the true behavioural relationship among aggregate variables in the economy is important as guidance for the optimal policy rule. The analysis also recognises that a credible commitment from the monetary authority towards the instrument chosen is important. DOWNLOAD

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In this paper, I use GARCH model to explain the relationship between real exchange rate and its uncertainty using real exchange rate data of Singapore. The result supports no evidence that overvalued real exchange rate creates uncertainty of exchange rate policy in Singapore. This may give some ideas to country like Indonesia or Thailand to still maintain the peg system and not easily, just accept the idea of using currency board system (CBS) or other strategies in its exchange rate policy. Indonesia needs to learn how Singaporean economic strategy brings the country to higher levels of economic development while still maintaining peg system. DOWNLOAD

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The economic crisis engulfing many Less Developed Countries (LDC’s) has focused attention on the fragility of their financial sector. But longer-term need of many LDC’s economies is to boost technological capability. While the physical capital is no longer the main problem for most of them, they need to improve their human capital by giving them appropriate skill and knowledge through educational improvement policy. This paper proposes strategies to improve the human capital by adding World Bank suggestion to enhance the information sector, which is crucial to effective market. DOWNLOAD

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Evidences that young people are the highest risky drivers causing highway deaths and fatalities had made the Congress to pass the Legislation (S 378) to restrict young people driving on the road. The focus of the legislation is how to reduce the alcohol use of young people that is suspected to be one of the most significant factors causes the highway deaths and fatalities. This paper, using the time series and panel data approach shows that it is more efficient to focus the legislation for all people in reducing the highway death and fatality rate. Further, the appropriate policy that should be passed by the Congress is how to limit the speed of vehicles on the road. DOWNLOAD

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