Sunday, September 21, 2008

How to Publish in AER and JPE: Think Like Detective (Among Many Other Things, Of Course)

While Ben Bernanke and Hank Paulson try to save the world, I am, in fact, enjoying the funny lyrics of two albums of The Smiths, The Queen is Dead and Louder than Bombs, and reading Fisman and Miguel's Economic Gangsters. It's a brand new popular book on the development economics of corruption that uses creative sherlock-holmes-like approach. In particular, I find two chapters on Suharto Inc and the diplomat's parking tickets in New York interesting.

Observing the ups and downs of Suharto-linked listed companies in Jakarta Stock Exchange when there was rumor on then the President's health in 1996, they estimate that the value of political connection was around 25 percent of such companies' market value. It's a big number, by the way, because even when Apple introduced the new technological breakthrough of iPhone in 2006, its share's price was up merely by 8 percent.

It was such a simple way to estimate the value of being close to a dictator, but with the approach that nobody haven't thought about it before, and by that it managed to get published in the most prestigious American Economic Review journal. Actually the paper (read here, in pdf) is more interesting than the chapter on the book.

On diplomatic parking tickets chapter, the conclusion might sound like stating the obvious, that is, in corruption, both norms, or values, and legal enforcement, matter. But the real catch is really the fact that you can relate, of all things, parking violation in New York to reveal the nature of corruption. You can read the academic journal underlying that chapter, that will be published in another prestigious Journal of Political Economy, here (in pdf).

Oh by the way, between 1997 and 2002, Indonesian UN diplomats were in the 24th ranking (out of 149 countries) with 36.5 tickets per diplomat.

3 comments:

  1. the share price increase alone doesn't really reflect the value (even contextually). the political connection is calc. as asset? 25% is a VERY LARGE pct. Very interesting, can a layman understand the book or is it smart people only?

    as for the parking tickets, that must be a recurring theme, you guys write about it a LOT on this blog :)

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  2. i'm downloading it for fun, see if i could decipher it.

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