Allan Hsiao

Weak environmental regulation has global consequences. When domestic regulation fails, the international community can intervene by targeting emitters with import tariffs. I develop a dynamic empirical framework for evaluating import tariffs as a substitute for domestic regulation, and I apply it to the market for palm oil, a major driver of deforestation and one of the largest sources of emissions globally. Coordinated, committed tariffs reduce emissions by 39% relative to 40% under domestic regulation, but free-riding concerns undermine coordination and static incentives undermine commitment.

Does electoral accountability discipline public spending? After the fall of Suharto, Indonesia held local elections for the first time in decades. I use a dynamic discrete choice framework to study how democratization affected the spatial allocation of public investment in healthcare infrastructure. On one hand, democratization limits distortions from Suharto-era biases toward certain areas, such as those within the patronage network. On the other hand, spillover effects are less internalized as districts become more focused on their own constituents.

This paper quantifies the long-run aggregate and distributional effects of Indonesia's Sekolah Dasar INPRES program, one of the largest school construction programs in history. I do so with a spatial equilibrium model in which students invest in education, then migrate for employment after graduation. I find that the program increased aggregate output by 8%, with large gains for rural students but small gains for rural regions. Labor market integration magnifies each effect, as education and migration are complements: access to high urban wages raises the returns to education, but also encourages students to leave rural regions behind.

More than one-third of Jakarta will be below sea level by 2050, exposing much of the city to coastal flooding. In response, the Indonesian government has begun construction on a $40 billion sea wall. How effective is a sea wall compared to other policies, such as relocation subsidies or zoning reforms? To answer this question, I study the effects of flooding in Jakarta historically. I monetize the cost of flood risk by measuring its capitalization into land values, and I embed these costs in a spatial model of urban development to study how developers, firms, and individuals make location decisions in response to rising flood risk. In the short run, the sea wall reduces flood exposure more than other policies do, although it does so at high cost. In the long run, it increases the concentration of activity in flood-prone areas. Indeed, the proposed sea wall has already boosted investment in the city's coastal north – precisely the area most vulnerable to flooding as sea levels continue to rise.