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The Impact of US Crisis on Trade and Stock Market in Indonesia

Author

Listed:
  • Mita Nezky

    (University of Indonesia)

Abstract

This paper analyzes the impact of the financial crisis in United States 2008 on Indonesia’s economy, by using Structural Vector Autoregressive (SVAR) model of 5 variables; Dow Jones Industrial Average, exchange rate, composite stock price index (IHSG), production index and trade tax income. The result shows that the US crisis affects the capital market in Indonesia where the Dow Jones Industrial Average plays greater role in explaining the IHSG, compared to Rupiah rate, production index and the trade income tax. In addition, the US crisis affects the volume and the trade income tax in Indonesia. These empirical results bring policy implication for Bappepam-LK as stock market regulator to intervene or to suspend the trade when the volatility exceeds the psychological threshold. It also emphasizes the necessity to diversify the export country destination and to increase the quality and the value added of Indonesian export.

Suggested Citation

  • Mita Nezky, 2013. "The Impact of US Crisis on Trade and Stock Market in Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 15(3), pages 1-14, January.
    • Handle: RePEc:idn:journl:v:15:y:2013:i:3j:p:1-14
    DOI: https://doi.org/10.21098/bemp.v15i3.428
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    Citations

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    Cited by:

    1. Chandra Utama & Insukindro & Ardyanto Fitrady, 2022. "Fiscal And Monetary Policy Interactions In Indonesia During Periods Of Economic Turmoil In The Us: 2001q1-2014q4," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(1), pages 97-116, June.
    2. Dhruv Rawat & Sujay Patni & Ram Mehta, 2021. "Stock prices and Macroeconomic indicators: Investigating a correlation in Indian context," Papers 2112.08071, arXiv.org, revised Feb 2022.
    3. Hu, Haiqing & Chen, Di & Sui, Bo & Zhang, Lang & Wang, Yinyin, 2020. "Price volatility spillovers between supply chain and innovation of financial pledges in China," Economic Modelling, Elsevier, vol. 89(C), pages 397-413.
    4. Dini Rochdiani & Eliana Wulandari, 2023. "Competitiveness Analysis and Factors Affecting Indonesian Cinnamon Exports," Economies, MDPI, vol. 11(2), pages 1-14, February.

    More about this item

    Keywords

    US Crisis; stock market; trade; SVAR;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

    Statistics

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