The Monetary-Fiscal Policy and Economic Growth In Indonesia : Further Empirical Evidence

MESYARAH, MESYARAH (2011) The Monetary-Fiscal Policy and Economic Growth In Indonesia : Further Empirical Evidence. S2 thesis, Universitas Andalas.

Text (Full Text) S2 Pascasarjana Ekonomi 2011 Mesyarah 0751126.pdf - Published Version Restricted to Repository staff only Download (7MB)

Abstract

The objective of this reaserch to eximane fiscal and monetary policy influence economic growth and development in Indonesia during 1981-2010. This study uses a vector error correction model (VECM) to estimate the research variables. The basic model of research consist of three structural equation, namely GDP as dependent variable, money supply the variable to representing the monetary policy, government expenditure the variable to representing the fiscal policy as independent variable.Base of the regression in this research show diat the fiscal policy will be more effective if it will be able to influence Gross Domestic Product or National Income bigger than other policy. The ability of the policy influence Gross Domestic Product shows by its multiplier. The research results show that fiscal multiplier is 0.69, monetary multiplier is 0.54. The conclusion of this research states that, fiscal policy is more effective on influencing Indonesia National Income rather than monetary policy. So Government authorities should be allocate the government expenditure to to economic sector in order to stimulate economic growth in Indonesia and always consider the development of monetary policy.

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