Impacts of Macroeconomic Forces and External Shocks on Real Output for Indonesia
AbstractExtending Romer (2000, 2006) and Taylor (1993, 1999, 2001), this paper applies the IS-MP model to study potential impacts of selected macroeconomic variables and external shocks including crude oil prices on real GDP for Indonesia. The results show that a higher real stock price, real appreciation of the rupiah, a lower inflation rate, a higher real crude oil price, and a lower real federal funds rate are expected to increase Indonesia’s real GDP. More deficit spending as a percent of GDP would not cause real output to rise. Hence, Indonesia would not suffer declining output because of higher oil prices. Due to the insignificant coefficient of the government deficit as a percent of GDP, fiscal prudence needs to be pursued.
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Bibliographic InfoArticle provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).
Volume (Year): 42 (2012)
Issue (Month): 1 (March)
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Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
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