Easing the traffic: the road-use effects of Indonesia's fuel subsidy reforms

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 03 May 2016


Coombs Seminar Room A, Coombs Building 9, Fellows Road, ANU


Dr Paul Burke, Fellow, Arndt-Corden Department of Economics, Crawford School, ANU.


Sarah Dong

Indonesia has serious traffic jams. This study uses panel data from 19 Indonesian toll roads over 2008–2015 to calculate the effects of Indonesia’s historic recent fuel subsidy reforms on vehicle travel. Estimates using either monthly or quarterly data suggest an immediate gasoline price elasticity of motor vehicle trips on these roads of –0.07, increasing to around –0.15 when responses over the course of a year are considered. By the end of 2015, we estimate that Indonesia’s fuel subsidy reforms of 2013 and 2014 had reduced traffic pressure on these roads by around 8 per cent relative to the counterfactual without reform.

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