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The Impact Of Fiscal Space On Indonesia’S Fiscal Behavior

Author

Listed:
  • Marcella Alifia Kuswana Putri

    (Universitas Katolik Parahyangan, Indonesia)

  • Chandra Utama

    (Universitas Katolik Parahyangan, Indonesia)

  • Ivantia Savitri Mokoginta

    (Universitas Katolik Parahyangan, Indonesia)

Abstract

This study investigates the impact of fiscal space on the probability that the government of Indonesia will be able to implement counter-cyclical fiscal behavior. We use ordinary least squares and probit methods to estimate the fiscal policy reaction function. This study confirms that increasing fiscal space can increase the probability of the government to execute its counter-cyclical behavior policy. A proposal to increase the space includes generating alternative sources of government revenues from taxes and non-taxes and redesigning subsidies toward selected targeting recipients to reduce the non-discretionary part of the government budget.

Suggested Citation

  • Marcella Alifia Kuswana Putri & Chandra Utama & Ivantia Savitri Mokoginta, 2022. "The Impact Of Fiscal Space On Indonesia’S Fiscal Behavior," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(2), pages 235-256, August.
    • Handle: RePEc:idn:journl:v:25:y:2022:i:2f:p:235-256
    DOI: https://doi.org/10.21098/bemp.v25i2.1845
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Fiscal policy; Fiscal space; Fiscal deficit; Business cycle; Macroeconomic stabilization;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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