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Fiscal and Monetary Policy Interactions in Indonesia During Periods of Economic Turmoil in the US: 2001Q1-2014Q4

Author

Listed:
  • Chandra Utama

    (Universitas Katolik Parahyangan)

  • Insukindro

    (Universitas Gadjah Mada)

  • Ardyanto Fitrady

    (Universitas Gadjah Mada)

Abstract

This study investigates the formation of the interaction between monetary and fiscal policies in Indonesia during periods of economic turmoil in the US (external shock) based on the Hybrid New Keynesian (HNK) model. The study estimates the HNK model using the Full Information Maximum Likelihood and time-series data over the period 2001Q1-2014Q4. The result reveals the form of coordination is a monetary-led policy mix between active monetary policy and passive fiscal policy. The degree of coordination is down when external shock increases.

Suggested Citation

  • 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.
    • Handle: RePEc:idn:journl:v:25:y:2022:i:1f:p:97-116
    DOI: https://doi.org/10.21098/bemp.v25i1.1619
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • 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
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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