Economic and Finance in Indonesia
Aims & Scope EFI mainly covers original idea related to the Economics and Finance in Indonesia. Published articles can be either theoretical, empirical, or in between of those two polar variants. The journal covers specific areas, including but not limited to: Agricultural Economics Capital Market Demography Development Economics Economy in Crisis Economy of Rural Areas Education Economics Energy Economics Environmental and Natural Resources Economics Financial Sector Health Economics History of Economic Thoughts Industrial Economics Institutional Aspect of Economy International Economics Investment Labor Economics Maritime Economics Methodology of Economics Monetary Economics Political Economics Poverty Economics Public Policy Public Sector Economics Regional Economics Urban Economics
Articles
104 Documents
<![CDATA["Does Inflation Targeting Framework Make a Significant Difference in Lowering Price Level?" What is Its Implication to Indonesia's Inflation Rate? ]]>
<![CDATA[Rachman, Faisal]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 2 ]]>
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<![CDATA[In the last two decades many countries have been starting to employ Inflation Targeting Framework (ITF) as their main monetary policy framework. This is done to achieve an objective of anchoring public expectation on inflation which in the end will steer the price level movement towards ITF's ultimate target of relatively low and stable inflation rate. By conducting Difference-in-Difference method on panel data consisting of five countries implementing ITF since 2001 and twenty-one selected non-ITF countries for period 1990-2010, it is statistically proved that ITF adoption has a significant effect on inflation. In case of Indonesia, through Structural Break approach, the implementation of ITF since 2005 is also proved able to lower and stabilize inflation rate.]]>
<![CDATA[Current Account and Real Exchange Rate Dynamics in Indonesia ]]>
<![CDATA[Mochtar, Firman]]>;
<![CDATA[Affandi, Yoga]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 2 ]]>
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<![CDATA[We analyze the role of both permanent and temporary factors in affecting the Indonesian current account and real exchange dynamics before and after 2000. Adopting Lee and Chinn (1998; 2006) approach as well as Chinn et al. (2007), two results stand out. First, we confirm that the behavior of the real exchange rate has altered since 2000. Identifications show that permanent shocks are the primary causes for the movements of the real exchange rate after 2000, while in the period before 2000, the Indonesian real exchange rates changes are characterized by greater dominance of temporary shocks. The apparent change in the real exchange rate behavior may be strongly justified by the implementation of free-floating exchange rate systems since August 1997. Second, the shift of the real exchange rate behavior after 2000 does not necessarily affect the current account dynamics. Empirical evidence confirms that the variance of current account post 2000 remains largely due to temporary shocks. Albeit having increasing influence, permanent shocks have insignificant effect in explaining fluctuations of the current account. In this sense, the current account surplus after 2000 is attributed largely to nominal variables such as price increase, while the impact of productivity improvement is still limited.]]>
<![CDATA[Rural Electrification Program in Indonesia: Comparing SEHEN and SHS Program ]]>
<![CDATA[Sambodo, Maxensius Tri]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 2 ]]>
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<![CDATA[In 2014, the Indonesian government has targets to obtain 80% of electrification ratio and 98.9% of rural electrification ratio. Extending the grid and off-grid connection has been done to obtain the targets. This paper aims to compare two main programs on rural electrification namely Super Extra Energy Saving (Super Ekstra Hemat Energi, SEHEN) that is belong to PLN (state owned company in electricity) and the Solar Home System (SHS) that is financed by the Ministry of Energy and Mineral Resources (MEMR). Indonesia has started the rural electrification program in the late 1950s, but how to provide electricity in a sustainable ways both organizationally and institutionally still become a big challenge. The experiences from East Nusa Tenggara provinces showed that both SEHEN and SHS can instantly improve electrification ratio, but government needs to synchronize the technical, administrative, and financial aspect from the two programs. Without any improvements in designing the program, we argue that the existing program is not sustainable.]]>
<![CDATA[Revisiting Stock Market Integration Pre-Post Subprime Mortgage Crisis: Insight From BRIC Countries ]]>
<![CDATA[Brahmana, Rayenda]]>;
<![CDATA[Puah, Chin-Hong]]>;
<![CDATA[Wong, Kai-Hung]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 2 ]]>
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<![CDATA[This study revisits the long-run relationships and short-run dynamic causal linkages among BRIC stock market, with the particular attention to the 2008 subprime mortgage crisis. Extending related empirical studies, comparative analyses of pre-crisis, and post-crisis periods were conducted to comprehensively evaluate how stock market integration was affected by financial crises. In general, after employing cointegration test and VAR test, the results reveal the increase of stock market integration in BRICs after the subprime crisis. The evidence also found that China stock market is the most influential among the BRICs, in which China stock market has the ability to Granger cause the other three BRICs member countries. An important implication of our findings is that the degree of integration among countries tends to change over time, especially around periods marked by financial crises.]]>
<![CDATA[Unequal Impact of Price Changes in Indonesia ]]>
<![CDATA[Pratikno, Ruly]]>;
<![CDATA[Ikhsan, Mohamad]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 3 ]]>
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<![CDATA[The main idea of this study is to determine the impact of relative inflation on poverty incidents and to investigate whether inflation inequality has occurred in Indonesia. Interesting results were found at regional level. Firstly, Jakarta had different poverty response with respect to price increases. Processed food and transportation inflation were more imperative for the poor in Jakarta. Secondly, the poor in province with low poverty figures were more prone to inflation. In general, the results show that food inflation has the major adverse impact on the poor. Moreover, we found that inflation in Indonesia has not been pro-poor.]]>
<![CDATA[Oil Exploration Economics: Empirical Evidence from Indonesian Geological Basins ]]>
<![CDATA[Patria, Hari]]>;
<![CDATA[Adrison, Vid]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 3 ]]>
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<![CDATA[Oil exploration has been subject to economic research for decades. Earlier studies of exploration models are mostly discussed the behavior of exploration at the macro-level analysis such as field, firm, region, and continental. This paper then focuses on the geological and economic factors that determine the well-drilling decision at the micro-level using disaggregated panel data of 32 geological basins in Indonesia over the period of 2004-2013. This study shows that the number of drilled wells is determined significantly by the lag of success rate, lag of discovery size, lag of global oil price, and regional location of geological basin.]]>
<![CDATA[Technical Efficiency Levels of Rural Banks (BPRs) in West Java: A Stochastic Frontier Approach ]]>
<![CDATA[Natih, Putu]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 3 ]]>
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<![CDATA[There is considerable evidence from around the world to support the idea that access to formal financial services is a key factor towards achieving poverty alleviation. The government of Indonesia has placed high importance on the issue of improved access to financial services and one feels that it would be appropriate to begin the process of analyzing effective financial inclusion initiatives with the existing Bank Perkreditan Rakyat (BPR) system. BPRs have long been an integral part of Indonesia's financial, economic, and social development. This research is focused on BPRs in West Java. In this research, the writer evaluates BPR performance within twenty-five districts in West Java, by measuring the technical efficiency levels of the BPRs through employing the Stochastic Frontier Approach (SFA). The district that has the highest BPR average inefficiency score is Bandung city and the district with the lowest average BPR inefficiency score is the district of Ciamis. Increases in bank concentration (indicated by the Hirschman-Herfindahl Index) and income per capita are shown to decrease BPR inefficiency levels. Increases in the percentage of the population under the poverty line, the percentage of the labor force with a high school education, the percentage of road length per area, and the amount of bank offices per district, increase the inefficiency levels of BPRs. Overall, it is found that BPRs cannot operate efficiently in areas which are too underdeveloped; neither can they operate efficiently in areas which are too well developed.]]>
<![CDATA[Determinants of Firm Innovation in Indonesia: The Role of Institutions and Access to Finance ]]>
<![CDATA[Mahendra, Edo]]>;
<![CDATA[Zuhdi, Ubaidillah]]>;
<![CDATA[Muyanto, Ratnawati]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 3 ]]>
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<![CDATA[This paper investigates the determinants of firm innovation in Indonesia. Using quality of local regulations index constructed by the Indonesia's Regional Autonomy Watch (KPPOD) as measure of institutions, We found that better institutional quality at the local level was associated with more innovation and that firms experiencing major obstacle in access to finance were less likely to innovate. Access to finance is more critical for small and medium enterprises (SMEs) whereas institutional quality is more important for large firms. The positive impact of better institutions on innovation is asymmetrically distributed. Better local institutional quality disproportionately benefited non-constrained firms.]]>
<![CDATA[Managing Productivity in the Infrastructure Sector: A Case Study from Indonesia ]]>
<![CDATA[Knight, Eric R. W.]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 61, No. 3 ]]>
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<![CDATA[This paper considers the nature of assessing productivity and effectiveness in infrastructure investment in the context of governments increasing investment in new infrastructure. Taking the case of energy infrastructure investment within Indonesia, this paper makes three contributions: (i) develops a model for assessing infrastructure productivity based on landscape, regime and niche-level changes, (ii) suggests the interconnection between these levels based on sequencing multi-level changes over time, and (iii) shows the role of supply and demand side initiatives in enabling new infrastructure investment is evaluated.]]>
<![CDATA[Middle Class and Democracy: An Assessment on the 2014 Indonesian’s Presidential Election ]]>
<![CDATA[Sambodo, Maxensius]]>
<![CDATA[ Economics and Finance in Indonesia Vol. 62, No. 1 ]]>
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<![CDATA[This paper aims to assess the role of middle class in Indonesia's democracy, with the particular focus of the last Indonesian Presidential election. This study uses econometric analyses to assess preferences of middle class in presidential election by exploring data at district/city and provincial. The main finding in this study strongly suggests that religious and personality are still important elements under the race of Indonesia president. This study also found that different group of middle class has different attitudes in selecting the presidential candidate and the upper group of middle class is more likely to select Joko Widodo. Finally, a fragile middle class and a relatively high number of abstainers could be a barrier toward more substantive democracy.]]>
