Abstract

This  study  aims  to  see  whether  there  is  a  decline  in  consumption  in retirement which is not in line with the life cycle hypothesis (consumption puzzle effect).  Previous studies revealed that consumption  has  shifted  when  entering retirement  due  to  efficient  spending.  This  research  analyzes  the  consumption pattern  of  the  Indonesian  elderly  peculiarly  in  the  frame  of  the  retirement consumption puzzle. Utilizing data from the Indonesian Family Life Survey (IFLS) wave 4 and 5 from 2007 and 2014, and this study constructed panel data with a total sample of 2,556 individuals. The Difference in Differences (DiD) method is used to  see  whether  the  change  in  labor  status  toward  retirement  causes  a  decrease  in household  consumption.  As  robustness,  this  study  also  uses  the  division  of  age categories. The results of this study indicate that there is a retirement consumption puzzle in Indonesia, with a decrease of 19.9% in total expenditure per capita. The consumption decrease in retirement indicates government should consider pension funds and create social security programs to maintain the welfare of the elderly. read more

Abstract

To recognize the importance of investment flows as one of the components of development, ASEAN member countries have created the ASEAN Economic Community (AEC) 2015 blueprint as guidelines for setting up a free and open investment regime in ASEAN. The enactment of AEC makes the issue of foreign direct investment (FDI) in Indonesia more attractive. However, an increase in FDI is followed by uneven absorption of FDI in various regions of Indonesia. The implementation of regional autonomy, which gives more authority to governors, allegedly influence investors’ decision to invest. This study aims to determine whether the disclosure of openness and the presidential election have an influence on FDI inflows across 30 provinces of Indonesia. This study employs panel data regression with a fixed effect model. The findings suggest that the level of openness and political variables contribute to the absorption rate of FDI inflows in the regions. read more

Abstract

This study examines the impact of digitalization on access to household credit during the National Economic Recovery Program. Data from the National Socioeconomic Survey (Survei Sosial Ekonomi Nasional/Susenas) and Village Potential Statistics (Potensi Desa/Podes) from 2019 (pre-pandemic) and 2021 (one year post-pandemic) are used in this research. Using the binomial logit model-fixed effect, this research found that digitalization has a significant impact on access to household credit, both before and during the COVID-19 pandemic. The majority of households with access to credit are headed by males living in rural areas, who are married, working, graduated from junior high school or above, and are 30-59 years old. In line with the national economic recovery program, the government can accelerate financial inclusion by increasing access to household credit to all levels of the society without gender discrimination through banking digitalization. read more

Abstract

We analyze the optimal cigarette excise tax rate based on the optimal tax theory. We find that the optimal tax is different when there is an illegal production of cigarettes. We find that, without illegal production of cigarettes, the government can achieve the first best optimum condition by fully internalizing externality. The government can optimally choose the amount of tax on legal cigarettes that is equal to the marginal cost of health care. When there is an illegal production of cigarettes, we find that the rate of cigarette excise tax is not equal to the marginal cost of health care. Therefore, the government need more policy instruments to achieve the optimal tax rate in this case. We also find that an increase in the work hours of a legal cigarette production reduces illegal cigarette productions. Policymakers can use marginal income tax policy as an incentive to reduce illegal production of cigarettes. read more