nep-sea New Economics Papers
on South East Asia
Issue of 2013‒01‒12
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Growth, Poverty and Labor Market Rigidity in Indonesia: A General Equilibrium Investigation By Arief Anshory Yusuf; Ahmad Komarulzaman; Muhammad Purnagunawan; Budy P. Resosudarmo
  2. Increasing Access to Water Service in Bandung Regency: A Policy Simulation By Ahmad Komarulzaman; Ben Satriatna
  3. Complementary Policies to Increase Poor People’s Access to Higher Education: The Case of West Java, Indonesia By Mohamad Fahmi; Achmad maulana; Arief Anshory Yusuf
  4. The Direct and Indirect Effect of Cash Transfers: The Case of Indonesia By Arief Anshory Yusuf
  5. Increasing Access to HIV treatment/ART through ART Scaling Up in West Java By Adiatma Y.M Siregar
  6. Responding to Financial Crisis: The Rise of State Ownership and Implications for Firm Performance By Carney, Richard W.; Liu, Wai-Man (Raymond); Ngo, Phong T. H.
  7. Stock and Foreign Exchange Market Linkages in Emerging Economies By Elena Andreou; Maria Matsi; Andreas Savvides
  8. The Role of Social Factors in Explaining Crime By Hamzah, Siti Nur Zahara; Lau, Evan
  9. The ‘Knowledge Economy’-finance nexus: how do IPRs matter in SSA and MENA countries? By Simplice A, Asongu
  10. Contracting over Prices By Shurojit Chatterji; Sayantan Ghosal

  1. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University); Ahmad Komarulzaman (Department of Economics, Padjadjaran University); Muhammad Purnagunawan (Department of Economics, Padjadjaran University); Budy P. Resosudarmo (Australian National University)
    Abstract: In this paper, we argue that the intensification of capital use and an acceleration of real wage growth can be the main culprits of the “jobless growth” in Indonesian manufacturing sector for the period of 1999-2008, a period of recovery from the Asian Crisis. This can also endanger the poverty reduction aspiration during the same period. We simulate the situation using a Computable General Equilibrium model and find that the effect of the increased capital utilization and the acceleration of real wage growth are equally important in explaining the jobless-growth phenomenon. Increased capital utilization help the economy recover and reduces poverty but when constrained with the increasing real wage, the recovery and the rate of poverty reduction is slower. The situation is in favor of the non-poor because first, the poor is mainly dependent on non-formal employment, hence do not benefit from the increased real wage; second, the slower expansion of the manufacturing sector affect the rest of the economy affecting the real wage of the labor employed in other sectors, such as unskilled non-formal labor and agricultural labor upon which the poor are heavily dependent; and third, the income rise from increased capital utilization mainly benefits the urban non-poor.
    Keywords: Growth, poverty, labor market, general equilibrium, Indonesia
    JEL: O53 J21 I38
    Date: 2013–01
  2. By: Ahmad Komarulzaman (Department of Economics, Padjadjaran University); Ben Satriatna (Department of Economics, Padjadjaran University)
    Abstract: Clean water provision still becomes a problem faced by developing countries, including Indonesia. One of the factors contributing to this problem is limited financial capability of the government. Therefore, if the government intend to increase clean water service coverage, they should be carefully choosing the most efficient strategy. This study tries to help the government of Bandung Regency in Indonesia to increase water service coverage by examining two different alternatives in provision of clean water service, which are small scale and large scale piped system. By employing Benefit Cost Analysis (BCA) this study found that despite the cost to develop large scale piped system is higher, the benefit gained from the system is significantly far exceeded the benefit of small system. As a result, the large system produces larger net benefit than the small one. The benefit of large scale piped system mainly contributed by illness incident and time saving for collecting water.
    Keywords: Clean water services, large scale piped system, Bandung Regency, Indonesia
    JEL: D61 I38 O21 Q25
    Date: 2013–01
  3. By: Mohamad Fahmi (Department of Economics, Padjadjaran University); Achmad maulana (Department of Economics, Padjadjaran University); Arief Anshory Yusuf (Department of Economics, Padjadjaran University)
    Abstract: We see a weakness of the merit-based government scholarship program for students from poor families, Bidik Misi, as most of them fail to meet the minimum academic requirement. This paper provide a policy simulation that compares two programs, private tutoring voucher (PTV) and conditional cash transfer (CCT), to complement the Bidik Misi scholarship to boost the number of poor students to get the support. To this end, we offer a policy targeted for second and third year high school students at public schools. The data sources that we used in this study are the Indonesia Family Life Survey (IFLS), the Indonesia Social and Economic Survey (SUSENAS), and some primary data. To choose the best alternatives, we compare the cost effectiveness of both program and we find that the cost effectiveness per student in private tutoring voucher (PTV) is lower than conditional cash transfer program. The PTV program is also more convincing than CCT as PTV could directly influence the quality of instruction. We also check the robustness of the scenario using two one way sensitivity analyses. The sensitivity analyses support our finding that PTV program has more cost effective than the CCT.
    Keywords: Policy simulation, Cost Effectiveness Analysis, Sensitivity Analysis, Private Tutoring Voucher, Conditional Cash Transfer
    JEL: I24 I28
    Date: 2013–01
  4. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University)
    Abstract: Economists have long argued that to increase households’ welfare, cash transfers are more efficient than commodities subsidies. However, not many studies address the indirect or economy-wide effect of such transfers especially in the context of poverty reduction programs in developing countries. In this paper, a 50 trillion rupiahs worth of cash transfers, roughly doubling the current level of government spending on poverty reduction program is simulated using a Computable General Equilibrium model of the Indonesian economy. The result suggests that such transfers reduce Indonesian GDP especially if domestically financed through increasing value added tax. However, the GDP reduction can be reduced to around half of that when financed by reducing distortionary fuel subsidy. Moreover, a cash transfers financed by reducing fuel subsidy also give the largest reduction in inequality. Various extents of the distribution of the transfers are compared, from giving it to the poorest 10% to distribute it equally to all households. It is found that the benefit of the transfers in terms of reduced poverty and inequality is smaller when we extend the beneficiaries toward the non-poor but its economy-wide cost in terms of the reduced GDP will be smaller. Policy implications are discussed.
    Keywords: Cash transfer, general equilibrium, Indonesia
    JEL: I38 O53
    Date: 2013–01
  5. By: Adiatma Y.M Siregar (Department of Economics, Padjadjaran University)
    Abstract: The number of HIV cases in Indonesia rose rapidly, increasing the need for antiretroviral treatment (ART). However, the public health expenditure on HIV/AIDS is relatively low, and ART are undersupplied and has limited fund. Strategies are required to increase the uptake of ART within limited resource. We simulate the increase of ART uptake as the result of scaling up ART in hospital or community level and use it to forecast the costs and implications on HIV epidemic in West Java by employing HIV in Indonesia Model (HIM). We collect data from both research sites and literatures. Benefit Incidence Analysis (BIA) is used to observe distribution pattern of access to HIV care among HIV patients. If by 2020 additional 20,000 PLHIV are treated with ART, the epidemic may decrease by roughly 1% in 2020 and around 6% (±2,100) of HIV infection would be averted. If around additional 45,000 PLHIV are treated in 2020, it may decrease the epidemic by approximately 4% in 2020 and around 18% (±6,000) of HIV infection would be averted. This requires 6 to 13 additional hospitals (costing US$1.3 mln to US$2.9 mln) or around 714 to 11,400 puskesmas (costing of US$1.1 mln to US$17.2 mln) distributing ART. The BIA analysis shows that the HIV patients’ access to the hospital seemed equally distributed. First, puskesmas better acts as a support to the already established hospital-based HIV service. Second, the specific demand and need for ART in puskesmas in separate region should be acknowledged before upscale ART through puskesmas. Third, ART upscale should be led by main referral hospitals, supported by satellite hospitals and puskesmas.
    Keywords: Indonesia, HIV, policy simulation, ART, economic analysis
    JEL: I14 I18
    Date: 2013–01
  6. By: Carney, Richard W.; Liu, Wai-Man (Raymond); Ngo, Phong T. H.
    Abstract: We examine changes to corporate ownership in nine East Asian countries following the 1997 Asian Financial Crisis. Countries with lower incomes and in which policy making involves greater transactions costs (i.e., veto points) have more firms with state ownership. Partial state ownership appears to be effective insurance against crisis. Firms with minority state ownership exhibit 5% (annualized) lower idiosyncratic volatility in the quarter of the Lehman Brothers collapse than firms with either no or dominant state ownership. Minority state-owned firms also enjoy a higher abnormal return of 3.7% and 6.1% in the two quarters following the collapse of Lehman Brothers.
    Keywords: financial crisis; government ownership; veto players; insurance; corporate performance
    JEL: H11 G38 G34 G10
    Date: 2012–10–26
  7. By: Elena Andreou; Maria Matsi; Andreas Savvides
    Abstract: This paper investigates bi-directional linkages between the stock and foreign exchange markets of a number of emerging economies. A quarto-variate VAR-GARCH model with the BEKK representation is estimated for each of twelve emerging economies to test for spillovers, both in terms of return and volatility, between the emerging stock market, foreign exchange market and global and regional stock markets. We find significant bi-directional spillovers between stock and foreign exchange markets. We also examine the effects of a country’s choice of exchange rate regime, on the one hand, and the Asian financial crisis, on the other, on the volatility spillover mechanism.
    Keywords: Volatility Spillovers, MGARCH, Emerging Economies
    Date: 2013–01
  8. By: Hamzah, Siti Nur Zahara; Lau, Evan
    Abstract: Utilizing Malaysia data from 1973 to 2008, the study reveals that crime can be influenced by population, fertility, unemployment, and GDP in either the long-run or short-run period. This study also further analysed beyond sample estimations of the variables involved and found that although violent crime can be explained in the short-run only from the VECM analysis, it is found to be explained by other explanatory variables in the long-run of beyond sample for at least 50 years ahead. It is important for policy makers to focus in both social structure and economic conditions to help prevent crime in the long-run.
    Keywords: fertility; violent; property; unemployment; VECM; causality
    JEL: C32 A13 J22 K42
    Date: 2013–01–01
  9. By: Simplice A, Asongu
    Abstract: This paper assesses the relevance of intellectual property rights (IPRs) in the knowledge economy (KE)-finance nexus using the four variables identified under the World Bank’s knowledge economy index (KEI) and seven financial intermediary dynamics of depth, efficiency, activity and size. Three main findings are established: (1) education increases financial dynamics of depth and size; (2) economic incentives by means of credit facilities (trade openness) mitigate financial dynamics of efficiency and activity (financial dynamics of depth and size) and; (3) ICT and FDI both improve financial depth and decrease financial size (with FDI having an additional edge of improving financial activity). As a policy implication, the enforcement of IPRs is not a general and sufficient condition for positive KE-finance nexuses. Hence, blanket upholding of IPRs to achieve such positive linkages may not be successful unless policy is contingent on the prevailing ‘KE specific component’ trends and dynamics of financial development.
    Keywords: Financial development; Knowledge economy; Intellectual property rights
    JEL: O38 O10 O34 K42 P48
    Date: 2013–01–01
  10. By: Shurojit Chatterji (Singapore Management University, School of Economics); Sayantan Ghosal (Warwick University)
    Abstract: We define a solution concept, perfectly contracted equilibrium, for an intertempo- ral exchange economy where agents are simultaneously price takers in spot commod- ity markets while engaging in ecient, non-Walrasian contracting over future prices. Without requiring that agents have perfect foresight, we show that perfectly contracted equilibrium outcomes are a subset of Pareto optimal allocations. It is a robust possi- bility for perfectly contracted equilibrium outcomes to differ from Arrow-Debreu equi- librium outcomes. We show that both centralized banking and retrading with bilateral contracting can lead to perfectly contracted equilibria.
    Keywords: equilibrium, future prices, uncertainty, contracts
    JEL: D5 D70 D72 D84
    Date: 2012–12

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