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