IS INDONESIA’S CURRENT ACCOUNT BALANCE OPTIMAL? EVIDENCE FROM AN INTERTEMPORAL APPROACH

Authors

Bhavesh Garg, Indian Institute of Technology Ropar, IndiaFollow
K. P. Prabheesh, Indian Institute of Technology Hyderabad, India

Document Type

Article

Abstract

This study investigates whether Indonesia’s Current Account (CA) balance is intertemporally solvent. We provide fresh evidence on Indonesia’s CA deficit solvency by considering post-crisis period data and conducting sub-sample analysis. Our findings suggest that Indonesia’s CA is not solvent. We notice evidence of excess lending prior to the global financial crisis of 2008 and excess borrowing in the post-crisis period. Policymakers need to focus on the composition of capital flows and management of volatile capital flows since discouraging foreign capital inflows may serve as a deterrent to economic growth.

Recommended Citation

Garg, Bhavesh and Prabheesh, K. P. (2022) "IS INDONESIA’S CURRENT ACCOUNT BALANCE OPTIMAL? EVIDENCE FROM AN INTERTEMPORAL APPROACH," Bulletin of Monetary Economics and Banking: Vol. 25: No. 0, Article 3.
DOI: https://doi.org/10.21098/bemp.v25i0.1843
Available at: https://bulletin.bmeb-bi.org/bmeb/vol25/iss0/3

First Page

1

Last Page

18

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

India

Affiliation

Indian Institute of Technology Ropar