Lab Seminar: "Dynamic rents and political accountability: Evidence from deforestation in Indonesia"

Curtis

ARE student Curtis Morrill presented his research on political rent-seeking and deforestation in Indonesia. Theory predicts that politicians reduce corruption in office when the value of reelection is greater. His research will test this theory using budget shocks generated by a large decentralization reform in Indonesia. By interacting simultaneous budget reductions with staggered election cycles at the local level, this reform creates plausibly exogenous differences in future budget shocks across mayors. His work will link these shifts to changes in corruption, using deforestation outcomes, fiscal audits, and public goods provision to measure rent-seeking behavior across local politicians. Preliminary evidence shows that future budget reductions increase deforestation, suggesting that political rent-seeking increases when the value of retaining office is reduced.