Book Reviews

Sumitro Djojohadikusumo, Perkembangan Pemikiran Ekonomi, Buku I: Dasar Teori Dalam Ekonomi Umum [The Development of Economic Thought, Book I: The Theoretical Basis In General Economics], Jakarta: Yayasan Obor Indonesia, 1991, pp. xxviii + 429

Selo Soemardjan, Indonesia: A Socio-Economic Profile, New Delhi: Sterling Publishers, 1988, pp. xi + 162

Australian International Development Assistance Bureau, Australia's Development Cooperation with Indonesia in the Agricultural sector, Volume 1: Main Report, Canberra: AIDAB, April 1991

Colin Barlow, Ria Gondowarsito, A. T. Birowo and S. K. W. Jayasuriya, Development in Eastern Indonesia: The Case of Nusa Tenggara Timur, Canberra: Australian Government Publishing Service, 1990, pp. v + 110

Jan G. I. Palte, Upland Farming on Java, Indonesia, Nederlandse GeografischeStudies 97, Amsterdam/Utrecht: Royal Dutch Geographical Society and Geographical Institute, University of Utrecht, 1989, pp. 256

Thomas Schweizer, Reisanbau in einem javanischen Dorf [Rice Cultivation in a Javanese Village, Köln: Böhlau Verlag, 1989, pp. xvi + 718

Desmond Ball and Helen Wilson (eds), Strange Neighbours: The Australia-Indonesia Relationship, Sydney and Singapore: Allen and Unwin, 1991, pp. xiv + 268. $24.95

The World Bank, Indonesia: Family Planning Perspectives in the 1990s, Washington D. C.: The world Bank, 1990, pp. xxii + 143

Jan Breman, Labour Migration and Rural Transformation in Colonial Asia, Amsterdam: Free University Press for Centre for Asian Studies, 1990, pp. 82, Dfl. 19.50; £9.50

Kenji Tsuchiya, Democracy and Leadership: The Rise of the Taman Siswa Movement in Indonesia, Monographs of the Centre for Southeast Asian studies, Kyoto University, English Language Series, No. 18, Honolulu: University of Hawaii Press, 1987, pp. xv + 230. US$16.00

BRIEFLY NOTED: Simme Veldman, Route Planning in a Centrally Assisted Liner System, Delft: Eburon, 1990, pp. 230

Richard Robinson, Power and Economy in Suharto's Indonesia, Journal of Contemporary Asia Publishers, Manila and Wollongong, 1990, pp. iv + 207     

After Cancun: The magic of the market

A simple model of the international economy is used to explore some possible consequences of development aid being tied to market-dominated policies. Two major consequences are greatly reduced benefits from, first, the aid and, second, from any appropriate technology that may be introduced.     

A reexamination of the consumption function using frequency domain regressions

This paper reexamines the permanent income hypothesis (PIH) in the frequency domain. In contrast to some time domain tests, our frequency domain approach provides an explicit and natural test ofboth the permanentand transitory implications of the PIH for jointly nonstationary consumption and income data. Using a simple theoretical model, we demonstrate that the PIH implies the marginal propensity to consume (MPC) out of zero frequency income is unity. The PIHalso implies that the theoretical MPC out of transitory (or high frequency) income is smaller than the long-run MPC. These theoretical restrictions are natural implications of Friedman's hypothesis that agents consume out of permanent or low frequency income and (dis)save out of transitory or high frequency income. We test this full set of restrictions directly using spectral regression techniques. Under our set of assumptions, the derived disposable income process is shown to have a unit root and to be cointegrated with consumption. We therefore employ a systems spectral regression procedure that accommodates stochastic trends in the consumption and income series as well as the joint dependence in these series. In view of the relatively recent development of these systems spectral estimators, we also conduct Monte Carlo simulations across both low and high frequencies to assess properties of the estimator relative to established single equation techniques. New empirical estimates of the consumption function and tests of the PIH based on systems spectral regression methods are reported for U.S. aggregate consumption and income data over the period 1948–1993. The empirical results provide some evidence for the theoretical implications of the PIH.     

Optimal jurisdictional fragmentation and mobility

Tiebout's hypothesis is examined in a model with the continuum of income classes and no economies of scale of population in public output provision. Any efficient allocation of resources can be achieved in this model by a system of jurisdictions, each containing a separate income class, and each using a local property tax to finance local public output. However, in general at most one such allocation will be an equilibrium if residents can ‘vote with their feet’. Conditions are derived under which higher-income residents will locate in jurisdictions providing a higher level of public output. These are shown necessary, given a separable utility function, for any optimal allocation to be sustainable as an equilibrium when residents are mobile.     

Survival of entrepreneurial firms: the role of agglomeration externalities

This paper analyzes the role of various types of agglomeration externalities on the survival rate of entrepreneurial firms. In particular, we trace the population cohort of newly-established and self-employed Swedish firms in the Knowledge-Intensive Business Service sector in 1997 up to 2012 and investigate the role of Marshallian and Jacobian externalities on the survival of these firms. We find that only Jacobian externalities (diversity) is positively associated with the survival of entrepreneurial firms. Not all Jacobian externalities matter though. Only the higher the ‘related variety’ of the region in which an entrepreneurial firm is founded, the higher will be the survival chance of the firm, while ‘unrelated variety’ barely has any significant correlation. The result is robust after controlling for extensive firm characteristics and individual characteristics of the founders. The main message here is: for a newly-established entrepreneurial firm, not only it matters who you are, but also where you are.     

Cashlessness in India: Vision,policy and practices

Over the past few years, an increasing convergence can be observed between international and Indian initiatives towards cashlessness, often involving a broad range of actors and influences. Despite this convergence, it is also clear that the conceptualization and implementation, or goals and outcomes of cashlessness can vary considerably, which indicates the need for a closer look at the Indian case. In this introductory note to the special issue on cashlessness in India, we outline the variety of institutions, stakeholders (regulatory, financial and technological actors), technologies and policies involved. As we have observed, digital payments and financial inclusion are two significant planks of cashlessness in India. Perhaps as a result, digital payments have been intentionally defined in a broad manner in India – ranging from anti-cash to less-cash and now contactless payments in the aftermath of Covid-19. Considering the variety of legal, economic, social and technological concerns involved, this special issue adopts 2 complementary foci to study cashlessness in India: technological visions and the systems undergirding it, and practices of end users. The special issue includes four papers. The first paper argues that the Digital India programme may lead to the commercialization of bias. The second paper historicizes the Indian demonetization of 2016 and examines its stated and unstated goals. The next paper provides a conceptual model on technology adoption in the context of digital payments. The final paper argues that users strategically switch between multiple payments media based on the context in which the transaction is taking place.     

Managerial Ownership and Financial Analysts’ Information Environment

Despite the importance of sell‐side financial analysts as information intermediaries in the capital market, little is known about how managerial equity ownership is associated with their information environment. Using Barron, Kim, Lim and Stevens’ (1998) framework for measuring the precision of financial analysts’ information, we observe that managerial ownership is positively associated with the precision of financial analysts’ public (common) and private (idiosyncratic) information, largely consistent with the alignment view of managerial equity ownership. These results are robust to controlling for various economic and statistical factors that might affect the inference.     

Robust and Powerful Tests for Nonlinear Deterministic Components

We develop a test for the presence of nonlinear deterministic components in a univariate time series, approximated using a Fourier series expansion, designed to be asymptotically robust to the order of integration of the process and to any weak dependence present. We show that our proposed test has uniformly greater local asymptotic power than the existing tests of Harvey, Leybourne and Xiao (2010) when the shocks are I(1), identical local asymptotic power when the shocks are I(0), and also improved finite sample properties. We also consider the issue of determining the number of Fourier frequencies used to specify any nonlinear deterministic components.     

The profitability of regression-based trading rules for the Shanghai stock market

This paper uses daily Shanghai A share data to evaluate the profitability of trading rules based on the predictability found in the return series. We find that the value of the trading-rule-based portfolio at the end of our sample is between 2 and 11 times that of an equity-buy-and-hold portfolio. We assess the robustness of the results in various ways: by carrying out various statistical tests, by varying the period over which the evaluation is carried out, by using a recursive estimation procedure for the forecasting equation, by incorporating transactions costs, and by considering weekly and monthly data.