Marselina, Marselina (2017) Building Economics Equilibrium Model Toward Macroeconomic Variables - New Consensus Macroeconomic Approach: Evidence from Indonesia. International Journal of Economic Perspectives, 2017, Volume 11, Issue 4, 647-656., 11 (4). pp. 647-656. ISSN 1307-1637

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Debt management and budget deficit in Indonesia is based on ACT No 17 of 2003 and followed by Government Regulation No 23 of 2003, in which government sets maximum limit on government debt of 60 % GDP and maximum limit on budget deficit of 3 %. This concept like Maastricht Treaty which is used in some Europe Countries which are facing high debt and to be default countries, and we worried about it. The weakness of this concept is thatdoes not describe when government is supposed to do the policy deficit, balanced, or surplus budget. As long as GDP increases, government debt can be increased, regardless of whether the economy needs it or not. Debt burden make fiscal space is limited and it has been happened in Indonesia in 1990’s. It is important to build a equilibrium model to control debt and budget deficit and the important thing it keep fiscal sustainability and economic growth. Fiscal sustainability is happened if debt is kept stable. This research is conductedby using New Consensus Macroeconomic (MKB) school to make an optimal decision through inter temporal choices.Using micro foundation and adding debt stabilizing deficit variable,Arestis model was elabotaed. The result found that deficit debt stabilizer in the model for a long term, gives positive impact on output gaps, the level of prices, exchange rates, current account, and primary budget deficits in Indonesia but it has no impact on the level of interest rates. Conversely, in a short term, debt deficit stabilizer in model gives positive impact toward output gap, exchange rate, and the primary deficit budget but it does not significantly influence interest rates, the level of price, and current account.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
Divisions: Fakultas Ekonomi dan Bisnis (FEB) > Prodi Ekonomi Pembangunan
Depositing User: MARSELINA
Date Deposited: 17 Feb 2020 03:44
Last Modified: 17 Feb 2020 03:44

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