Indonesian Politics in 2014: Democracy’s Close Call

Indonesian democracy experienced a near miss in 2014, when Jakarta governor Joko Widodo (Jokowi) defeated former general Prabowo Subianto by a margin of 6.3% in the presidential election. Both candidates were populists who rose to prominence in the context of public disillusionment with incumbent president Yudhoyono; Prabowo, however, condemned Indonesia's democratic system and promised to take Indonesia in a more authoritarian direction. We trace democracy's close call through five phases: the dying months of Yudhoyono's presidency, the rise of populist alternatives, the parliamentary elections of April 2014, the July presidential campaign, and the aftermath. We attribute the strength of Prabowo's campaign to superior organisational and financial support, while Jokowi's victory rested upon strong identification with him among poor and rural voters. Also determining the outcome was the fact that public satisfaction with democracy remained strong, undermining the effectiveness of Prabowo's authoritarian-populist message. Nevertheless, democracy's future remains uncertain, given that Prabowo and his supporters now control a sufficiently large number of parliamentary seats to continue promoting a rollback of democratic reforms.     

Tantra as episteme: A pedagogy of the future

In the face of the contemporary university's failure to escape from economic rationality and therefore create environments conducive to positive futures an alternative model of university is proposed. This is based on an episteme rooted in Tantra, a world view that allows for a multi-layering of discourse to occur in order to greatly extend the university's mandate as a cultural catalyst for future generations. It is argured that Tantra, which is situated in a resurgent indigenous consciousness, is both ancient and modern possessing as it does the deep wisdoms of this episteme while being energised with a liberatory ethic aimed at physical, social and spiritual emancipation from exploitative ideologies.     

Production Externalities and Urban Configuration

We formally explore Jacobs' idea that uncompensated knowledge spillovers are crucial for agglomeration by modeling location-dependent interfirm production externalities in a general-equilibrium linear-city framework. Good and factor allocation, firms' and households' locational choice, and wages and land rents are all endogenously determined. The unique equilibrium urban configuration may be concentrated (with monocentric firm locations), dispersed (with completely mixed firm/household locations), or a combination, depending on the population of firms, transportation cost, and firm-interaction parameters. Due to distance-dependent production externalities, firms will be clustered together in any equilibrium, thus ruling out the possibility of any multicentric urban configuration. Journal of Economic Literature Classification Numbers: D51, R12.     

CONSISTENT ESTIMATION OF RESIDUAL VARIANCE IN REGULATORY EVENT STUDIES

This study presents new evidence on alternative methods used to test for abnormal returns in regulatory event studies where cross-sectional correlation in residuals is significant. Results contradict earlier studies that find no advantages to using joint generalized least squares (JGLS) methods over ordinary least squares (OLS). We find that in an actual regulatory event study cross-correlation is significant, and that failing to correct for this correlation results in substantially higher calculated F-statistics. In Monte Carlo simulations we find that OLS test statistics are not well specified when residuals exhibit cross-sectional correlation at levels that are reasonable to expect in daily return data, while JGLS test statistics are well specified. The study includes tests of the effective power of the OLS and JGLS statistics.     

Optimal disinflation in new Keynesian models

Central bankers' conventional wisdom suggests that nominal interest rates should be raised to attain a lower inflation target. In contrast, I show that the standard New Keynesian monetary model with rational expectations and full credibility predicts that nominal interest rates should be decreased to attain this goal. Real interest rates, however, are virtually unchanged. These results also hold in recent vintages of New Keynesian models with sticky wages, price and wage indexation and habit formation in consumption.     

Expropriation risk and technology

This paper develops a unified framework to analyze the dynamics of firm investment in countries with poor legal enforcement. The firm's technology edge over the government generates endogenous property rights. Industry variation in the technology gap predicts a sectoral pecking-order of expropriations. Long-run investment distortions may be Pareto superior relative to persistent investment at the static optimum. The dynamics of investment and transfers depend on whether incentives (backloading) or efficiency (frontloading) concerns dominate at the initial division of surplus. An increase in government efficiency may reduce its welfare. The model provides a technology-driven rationale for the widespread use of conglomerate structures in emerging market countries.     

Risk Preferences Regarding Multiple Fatalities and Some Implications for Societal Risk Decision Making—An Empirical Study

Risk preferences related to accidents or other situations involving the possibility of multiple fatalities were studied in 87 persons in Sweden belonging to two separate groups with professional or educational knowledge of risk‐ and crisis‐management issues. Use was made of a tradeoff method, the results obtained consisting of von Neuman–Morgenstern utility functions over the range of 0–1000 fatalities. Most of the utility curves for the number of fatalities were found to be convex, implying the majority of subjects to display risk‐seeking behaviour. Implications of the findings for societal risk decision making are discussed, along with prospective areas of application and the possibilities of considering other dimensions than the number of fatalities.     

Framing Work Through a Socio-technical Ensemble: The Case of Butler Co.

The paper argues for conceptualizing technology as a socio-technical ensemble which emerges from the socio-political context of the organization. This perspective is used to inform a case study carried out within a consumer goods company, where the focus is upon the configuration of work and technology associated with the job of sales representative. It is argued that the acquiescence and compliance of the sales representatives are to be understood primarily on the basis of senior management's effective deployment of its power resource through 'enacting the environment', the configuration and utilization of the ensemble, and its employment strategy. 'Closure' and 'stabilization' had occurred, and the ensemble was operating on a number of levels.