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The Impact of Government's Foreign Debt on Fiscal Sustainability of Indonesia

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  • Yohanes Maria Vianey Mudayen

    (Department of Economic Education, Universitas Sanata Dharma Yogyakarta, Indonesia.)

Abstract

The aim of the research is to analyze the impact of government's foreign debt on fiscal sustainability (FS) of Indonesia in 1979-2016. The model used in this research is a simultaneous equation model with the method of two stage least square. The simultaneous equation model regression results indicate that government foreign debt, FS which derives from the reduced-form equation and primary balance has a significant impact on the growth of economy in Indonesia positively. Government foreign debt lag and interest rate of Central Bank of Indonesia have a negative impact and it is significant toward the FS of Indonesia. However, the economic growth which comes from reduced form affect positively and have a significant impact on the FS of Indonesia.

Suggested Citation

  • Yohanes Maria Vianey Mudayen, 2017. "The Impact of Government's Foreign Debt on Fiscal Sustainability of Indonesia," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 7(3), pages 746-751.
    • Handle: RePEc:eco:journ1:2017-03-95
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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