Allan Hsiao

Sea level rise poses an existential threat to Jakarta, which faces frequent and worsening flooding. The government has responded with a proposed sea wall. In this setting, I study how government intervention complicates long-run adaptation by creating coastal moral hazard. I quantify this force with a dynamic spatial model in which developers and residents act with flood risk in mind. I find that moral hazard generates severe lock-in and limits migration inland, even over the long run. Inland incentive policies reduce this friction.

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.

Tropical deforestation is a major driver of global emissions. We survey the literature and discuss next steps for researchers and policymakers.